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Hong Kong - Asian markets crept up in early trade on Wednesday with energy firms getting a shot in the arm from a rally in oil prices but worries about the global economy and the upcoming earnings season kept traders on edge.
After a confident rebound in March, analysts suggest dealers from Asia to the Americas may be concerned the gains - which followed January and February's bloodbath - were a little overdone.
Oil, which last month rallied above $40 for the first time this year, have returned to the agenda as market-watchers await a crucial meeting of producers aimed at addressing a supply glut and plunging prices.
Prices soared in March after the talks were arranged by oil giants Saudi Arabia and Russia in a bid to end a slump that had battered global markets. Those hopes were dealt a blow on Friday when Riyadh said it would not take part without agreement from Iran and other major suppliers.
But the two main crude contracts rallied on Wednesday after Kuwait said it still thought the April 17 meeting in Doha could produce a deal, even without the inclusion of key OPEC member Iran.
"Oil producers have no option but to freeze their production as oil prices are low and hurting everyone," Kuwait's OPEC governor Nawal al-Fezaia said. "All early signs before the meeting point to this conclusion."
In morning trade, West Texas Intermediate was up 2.7% at $36.87 and Brent added 1.7% to $38.51.
"Oil is going to be very volatile in the lead-up to the meeting," Angus Nicholson, an analyst at IG in Melbourne, said. "It's so uncertain as to whether a deal is going to be reached," he told Bloomberg News.
The gains in oil lifted energy firms after Tuesday's hefty losses. Hong Kong-listed CNOOC was up one percent and PetroChina added 1.7%, while in Sydney, Woodside Petroleum put on 2.3% and BHP Billiton gained 1.6%.
Inpex in Tokyo was 0.5% higher and JX Holdings gained 0.9%. Utilities were also lifted in Japan by news that a court had ruled the country's two operating nuclear reactors can remain online.
However, broader stock markets in the region struggled to gain traction. Tokyo was 0.3% up by lunch, having fallen for six straight sessions, losing more than 8%.
Among other markets, Hong Kong was up 0.1%, Sydney added 0.5% and Seoul gained 0.3% while Shanghai put on 0.1%.
The dollar is wallowing at its lowest levels against the yen since October 2014 with expectations of a US interest rate hike this year fading, while the recent sell-off in equities has fuelled a flight to the Japanese unit, which is considered a safe bet.
"It's not that obvious why market sentiment has turned so much and it may just reflect an unwinding from the buoyant conditions during March," Jason Wong, a currency strategist in Wellington at Bank of New Zealand, said in a note to clients.
"A more dovish Fed explains a lot of the move, but other less obvious forces are also at play. There is widespread anticipation of further Bank of Japan easing at the end of the month, but unless something radical is done... it's hard to see a further nudge down in interest rates or more asset purchases doing much to reverse the trend," Wong added.
