Imminent US rate rises

The shares look set to trade in a tight range today after Fed chief Janet Yellen suggested that an interest rate hike could be very soon if data support. Although Wall Street saw the bright side of the rate hike as a vote of confidence in the US economy, liquidity in stock markets, particularly in emerging economies, could be adversely affected. Locally, NBTC’s estimation of Bt150bn investment in 4G means huge private investment which will have a positive impact on the overall economy. Nevertheless, this will drag on earnings of mobile phone operators for at least a year or so but will benefit EPC contractors.

Local issue
NBTC estimates Bt150bn investment in 4G. Mobile operators are anticipated to invest at least Bt150bn on 4G network expansion by 2018, said NBTC. Such investment corresponds with increasing demand for mobile data usage. NBTC’s vice-chairman Col Settapong Malisuwan also said this development should help transform Thailand into an internet-empowered economy becoming an Asean digital infrastructure hub by 2020. (Bangkok Post)

Drought impacted palm oil producers. Secretary-general of the Thai Oil Palm and Palm Oil Association Wiwan Boonyaprateeprat said fresh palm nut supply over the last three months had dramatically declined due to the drought, simultaneously causing price to rise as high as Bt6/kg. The higher prices have led crushing mills and palm refineries to face higher production costs and even operating losses for some. (Bangkok Post)

Global issues
Friday's US jobs data will be the highlight of the week after some members of the Fed's Federal Open Market Committee suggested a rate increase could come as early as June if the US economy recovered from a weak 1Q16. (Reuters)

US Treasury prices fell on Friday with short-dated yields spiking up after Federal Reserve Chair Janet Yellen said gradual US interest rate increases would be appropriate if the economy improves further and the labor market tightens. Benchmark 10-year Treasury notes were down 8/32 in price for a yield of 1.851%, up nearly 3 basis points from Thursday. (Reuters)

The US dollar index hit two-month highs on Friday after Fed Chair Janet Yellen left the door open to an interest rate increase in the coming months. The dollar index rose 0.60% to 95.745, the highest level since March 29. It has surged from a low of 91.919 on May 3. (Reuters)

USA
Wall Street rose on Friday and capped off its strongest week since March after Fed Chair Janet Yellen said an interest-rate hike would likely be appropriate "in the coming months." Yellen suggested that the US economy has improved enough to warrant tighter borrowing costs, with a growing number of investors now expecting a hike in June or July. (Reuters)

Second reading of 1Q16 GDP at 0.8% vs. 0.9% estimate: The US economic growth slowed in 1Q16 although not as sharply as initially thought. GDP rose at a 0.8% annual rate as opposed to the 0.5% pace reported last month - the slowest growth since 1Q15. Economists had expected a 0.9% growth rate. (Reuters)

Traders raised their expectations of a June rate hike to 34% from 30%, according to CME Group, after Yellen's speech. (Reuters) 

Europe
European shares were steady on Friday, propped up by the Swiss stock market and pharmaceuticals companies after drug maker Roche climbed on positive results for one of its products. (Reuters)

The ECB holds its policy meeting on Thursday after the publication of inflation and lending data earlier in the week. The central bank is expected to keep interest rates on hold and reaffirm its focus on implementing the stimulus package announced in March. (Reuters)

Asia
Japanese PM Shinzo Abe plans to delay an increase in sales tax by two and a half years, a government official said on Sunday, as the economy sputters and Abe prepares for a national election. (Reuters)

Japanese retail sales fell in April for the second consecutive month, bolstering the argument that a nationwide sales tax increase scheduled for April next year should be delayed. Japanese retail sales fell 0.8% YoY in April, less than a median market forecast for a 1.2% decline, government data showed on Monday. That marked the fastest decline since March 2015. (Reuters)

Japan's core consumer prices fell for the second straight month in April as weak consumption discouraged firms from raising prices, stoking fears of deflation and keeping pressure on the BOJ to do more to hit its ambitious inflation target. The nationwide core CPI, which includes energy but excludes volatile fresh food costs, fell 0.3% YoY in April, matching the drop in March which was the biggest annual decline in three years. (Reuters)

The PBOC condemned two recent news reports from foreign media about the country's currency reforms and monetary policy. The reports "fabricated facts, misled readers, misled markets," the statement said, adding the central bank would investigate and take legal action.

Commodities
Oil prices dipped for a second day in a row on Friday as some investors took profit on a surge to seven-month highs while others worried about higher production with the market hovering near US$50 a barrel. Brent crude settled down 27 cents (-0.5%), at US$49.32 a barrel. US crude slipped 15 cents (-0.3%), to settle at US$49.33. The slide in the US oil rig count has virtually halted, with just 2 rigs idled this week, data from industry firm Baker Hughes showed on Friday. In the coming week, investors will watch the outcome of an OPEC meeting for signs of more output from Saudi Arabia and Iran in their battle for market share. (Reuters)

Gold slid 1% to a three-month low on Friday, extending losses after Fed Chair Janet Yellen indicated the US central bank could raise interest rates within months if the economy continues to improve, boosting the dollar. Spot gold was down 0.9% at US$1,208.90 an ounce. (Reuters)

Source: aws.co.th / settrade.com