Citing a source briefed on the matter, Reuters reports that several Chinese warplanes fly close to the median line of the Taiwan strait on Tuesday morning.

Several Chinese warships have stayed close to the median line of the Taiwan strait since Monday, the source said.

In response to this, Taiwan's military said it will not be raising its alert level but will strengthen its readiness for combat from today until Thursday.

Tensions are intensifying between the US and China over Taiwan as US House Speaker Pelosi is said to be arriving in Taiwan on Tuesday evening local time to visit the country's President. China has made threats to Pelosi's personal safety if she visits Taiwan.

Market reaction

Risk sentiment remains in a weaker spot so far this Thursday, reflective of the 0.50% drop in the US S&P 500 futures. The Chinese proxy, the AUD/USD pair, is down 0.16% on the day at 0.7010, unable to benefit from hawkish RBA expectations.