Market Close Apr 29

Investors stay upbeat ahead of Fed as oil rallies

Strong earnings from Alphabet stokes rally; Oil rebound brings relief; Strong responses to primary bond offerings

by Umesh Desai
Investors stay upbeat ahead of Fed as oil rallies
A healthcare worker in personal protective equipment collects a nasal swab from a migrant worker in Singapore to test for the coronavirus at a foreign workers' dormitory in Singapore on April 37, 2020. Photo: Roslan Rahman / AFP 

HONG KONG: Investor sentiment stayed upbeat as markets tracked gains ahead of the US Federal Reserve meeting which will provide guidance as to how long rates will remain at these low levels. Better than expected earnings from Alphabet Inc, Google’s parent, is also lifting sentiment.

The earnings revealed some hopeful signs in advertising, which represents the lion's share of Alphabet's revenue and is closely tied to economic conditions.

S&P Futures were up 0.7% and the Stoxx Europe 600 added 0.1% after Asia’s gains.

The oil price rebound has brought a sense of relief even to oil importers like China.

“The Chinese economy loses more than it gains when oil prices are in a freefall. A strong dollar, tightened global financial conditions, and depressed global trade more than offset any price discounts China might have benefited from cheaper oil,” Jing Sima, China strategist at BCA Research, said in a note.

Credit markets are positive with the Asia IG index narrowing by 2 basis points to 117/119 bps, with the issuance pipeline likely to get busy in coming days.

Shuifa Group’s 3-year dollar bond’s final price guidance was 10 basis points tighter and Nan Hai’s 2NC1 bond was launched 50 bps tighter than the initial guidance, which showed the strong demand for yield.

The Korean Kospi benchmark rose 0.7%, the Hang Seng index edged up 0.3% and China’s CSI300 benchmark climbed 0.46%. The commodity-influenced ASX 200 added 1.51% as WTI prices flared up 15% and Brent advanced 4.5%. Regionally, the MSCI Asia Pacific benchmark added 0.67% with the Japanese markets shut for a bank holiday.

The relief came as authorities have started lifting the travel and other restrictions in several countries in the region.

"China and Korea imposed tough restrictions early on, and are restoring activities 6-8 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 the second wave of its spread continues to worry investors. The number of infections has crossed 3.1 million worldwide with over 217,000 deaths.

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Asia Stocks

# Japanese markets were shut for a bank holiday

# Australia's S&P ASX 200 jumped 1.51%

# Hong Kong's Hang Seng index advanced 0.3%

# China's CSI300 climbed 0.46%

# The MSCI Asia Pacific index added 0.67%

Stock of the day 

BYD Ltd. rose as much as 9.3% after publishing results that showed a surge in the electric carmaker’s operating cash flow even as net profit tumbled.