The Reserve Bank of Australia (RBA) is expected to keep its cash rate at a record low of 1% later in the day, though it will likely cut them again two more times to boost inflation and support a stuttering economy, a Reuters poll showed.

At 0203 GMT, The S&P/ASX 200 index was up 0.1% to 6,583.10. The benchmark closed 0.4% lower on Monday.

A new round of tariffs took effect on Sunday, with the United States imposing 15% tariffs on a variety of Chinese goods and China imposing new duties on U.S. crude oil, the latest escalation in their trade war.

"We are looking to see how Chinese investors react and if we see similar strength as we saw yesterday in Shanghai and Shenzhen we might actually see a positive close for other markets including Australia," Michael McCarthy, chief market strategist at CMC Markets said.

Australian markets are highly sensitive to developments in  China, a major buyer of its commodities and resources.

The country's metals and mining sector, which are heavily dependent on China, lost as much as 0.4% before recouping some losses to trade flat.

Global miners BHP Group and Rio Tinto traded between 0.1% and 0.6% lower.

Meanwhile, Papua New Guinea-focused Oil Search propelled the energy sub-index 0.3% higher, despite a slump in global crude prices on demand concerns.

Oil Search climbed as much as 1.4%, despite trading ex-dividend, ahead of a decision by the PNG government on a gas deal in which Oil Search is a partner France's Total SA .

Australia's heavyweight financial stocks also lent some support to the local benchmark with the sub-index rising 0.2%.

The "big four" banks gained between 0.2% and 1%.

"I suspect it is more of bargain hunting than any expectations around the RBA that is lifting the financial sector today," McCarthy added.

Across the Tasman Sea, New Zealand's benchmark S&P/NZX 50 index rose 0.6% to 10,861.65 with energy retailer Contact Energy leading the gains, putting on nearly 3%.