Asian markets are cautiously optimistic as economies reopen ahead of the US Federal Reserve meeting where investors will seek forward guidance as to how long rates will remain at low levels.

Sentiment was boosted by advances in oil prices and better earnings from Alphabet Inc, although the disappointing earnings from Samsung offset some of the optimism.

“China and Korea imposed tough restrictions early on, and are restoring activities six to eight weeks ahead of others,” BofA Securities analysts said in a note.

“With reopening imminent in many countries, a natural question would be how to do so without jeopardizing current containment and risking another lockdown.”

The coronavirus pandemic infection count may have plateaued but a second wave of its spread continues to worry investors. The number of infections has crossed 3.1 million worldwide with over 217,000 deaths.

“For emerging market economies in South (and SE) Asia, the second wave of countries infected, the near-term outlook is weak, especially for Malaysia, Thailand, the Philippines and Indonesia, as the risks of an extended lockdown are material to both households due to the effect of income as well as corporates that are dependent on discretionary consumption among other factors,” Western Asset said in a note.

“The heterogeneity of Asian economies will continue to reflect the divergence in growth between economies more closely linked to China’s consumption and the Asian tech supply chain as well as those that are more endogenously driven.”

Also read: China’s software, retail sectors decimated

The Korean Kospi benchmark is up 1%, while the Hang Seng index has edged up 0.3% and the ASX 200 has added 1.2% as WTI prices flared up 10% and Brent edged up 1%. Regionally, the MSCI Asia Pacific benchmark has advanced 0.64% with the Japanese markets shut for a bank holiday.

Credit markets are positive with the Asia IG index narrowing by a basis point to 118/120 bps, with the issuance pipeline likely to get busy in coming days. Shuifa International has issued price guidance for a Baa3-rated 3-year dollar bond, Nan Hai Corporation is in the market with a 2NC1 dollar bond and Indonesia is hosting a bondholders’ conference call.

Later in the day, the US Federal Reserve is scheduled to meet but the focus is on the outlook as no rate changes are expected. Markets will also pay attention to the US GDP data to assess the extend of the economic damage.

“We expect the GDP data due on Wednesday to show output contracting by 3.5% annualised in the first quarter, mainly due to a sharp decline in real consumption in the second half of March as coronavirus restrictions proliferated,” Capital Economics said in a note. “With consumption likely to see an even sharper fall in April and business investment also probably plunging, we anticipate an even larger decline in GDP in the second quarter, potentially in the region of 40% annualised.”

On Thursday, the European Central Bank sets policy and markets will be keen to see if there is a further pledge to raise its asset purchase program after it agreed last week to accept junk bonds as collateral for bank loans.

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