Expect the SET to trade higher today trailing sharp gains on Wall Street and European bourses as investors are starting to accept the notion of inevitable Fed rate hikes sooner rather than later and that they are not inherently bad in themselves. However, market gains today should be limited and, similar to other emerging equity markets, the SET could be subject to high volatility in coming weeks on the possibility of another round of capital outflows resulting from the likely Fed rate increases. There is no new local catalyst to spur the market today.
Local issue
Thailand’s economy to recover at moderate pace, said Moody’s. Moody’s Investors Service forecasts Thailand’s GDP will expand by 2.8% in 2016 and 3% in 2017. Key challenging factors for the country include high household debt and domestic political uncertainty which are weighing on private consumption, along with the lack of structural improvements for export-oriented manufacturing infrastructure. Meanwhile, the country’s sovereign credit rating remains at Baa1, thanks to low public debt, price stability, as well as robust government expenditure. (Bangkok Post)
Thailand’s economy to recover at moderate pace, said Moody’s. Moody’s Investors Service forecasts Thailand’s GDP will expand by 2.8% in 2016 and 3% in 2017. Key challenging factors for the country include high household debt and domestic political uncertainty which are weighing on private consumption, along with the lack of structural improvements for export-oriented manufacturing infrastructure. Meanwhile, the country’s sovereign credit rating remains at Baa1, thanks to low public debt, price stability, as well as robust government expenditure. (Bangkok Post)
Cabinet nod for AIIB initial payment. The cabinet yesterday approved a required initial payment of Bt2bn from the central budget to the China-led Asian Infrastructure Investment Bank (AIIB) before the AIIB holds its first annual meeting on 25-26 Jun in Beijing. (Bangkok Post)
Thailand, Australia to widen free trade pact. Commerce Minister Apiradi Tantraporn said the government is looking to expand the free-trade agreement between Thailand and Australia (Tafta) aiming to further strengthen and increase trade and investment between the two countries. The minister said Thailand and Australia have made an appointment to meet and discuss in the second half of this year. (Bangkok Post)
Tax on sugar in consideration. The Excise Department is conducting a feasibility study in a bid to impose a tax on drinks with high sugar content. According to director-general Somchai Pulswas, whether a drink with high sugar content will be taxed will depend on its effect on consumer health, plus an impact on the industry will also be considered. (Bangkok Post)
JAS (Bt4.64)’s subsidiary, JASMBB, must pay a Bt130mn fine for failing to pay for a 900 MHz spectrum license, A National Broadcasting and Telecommunications Commission (NBTC) panel has concluded. The claim is calculated from interest of 7.5% per day of the first instalment of Bt8.04bn plus Bt18mn re-auction cost. Apart from this fine, the NBTC has already seized the Bt644mn deposit. The panel will submit its conclusion to the NBTC telecom committee today. (The Nation)
Comment: The fine amount was as expected. This should be a long story in the court.
Global issues
US Treasury prices fell on Tuesday, with the two-year yield touching two-month highs, on strong US home sales data that could allow the Federal Reserve to raises interest rates soon. Benchmark 10-year Treasury prices were down 5/32 in price for a yield of 1.859%, up 2 basis points from Monday. The two-year Treasury yield was up as much as 3 basis points to a two-month high at 0.930% before easing to 0.909%, up 1 basis point on the day. (Reuters)
US Treasury prices fell on Tuesday, with the two-year yield touching two-month highs, on strong US home sales data that could allow the Federal Reserve to raises interest rates soon. Benchmark 10-year Treasury prices were down 5/32 in price for a yield of 1.859%, up 2 basis points from Monday. The two-year Treasury yield was up as much as 3 basis points to a two-month high at 0.930% before easing to 0.909%, up 1 basis point on the day. (Reuters)
The US dollar hit its highest level against the euro in nearly 10 weeks on Tuesday and rallied against the yen on increased expectations for an interest rate hike in coming months from the Fed. The dollar index hit an eight-week high of 95.647. (Reuters)
USA
Wall Street shares surged over 1% on Tuesday and the Nasdaq had its strongest day in three months as investors made peace with the possibility that the US Federal Reserve might soon raise interest rates. Shares rose in the banking sector, which stands to gain from higher interest rates. Microsoft jumped 3.12% and provided the biggest boost to the Nasdaq and S&P500. (Reuters)
Wall Street shares surged over 1% on Tuesday and the Nasdaq had its strongest day in three months as investors made peace with the possibility that the US Federal Reserve might soon raise interest rates. Shares rose in the banking sector, which stands to gain from higher interest rates. Microsoft jumped 3.12% and provided the biggest boost to the Nasdaq and S&P500. (Reuters)
New US single-family home sales surged to a more than eight-year high in April and prices hit a record high, offering further evidence of a pick-up in economic growth. New home sales jumped 16.6% to a seasonally adjusted annual rate of 619,000 units, the highest level since January 2008. March's sales pace was revised up to 531,000 units from the previously reported 511,000 units. Economists had forecast new home sales rising to only a 523,000 unit-rate last month. The median price for a new home increased 9.7% YoY to a record US$321,100. (Reuters)
Europe
European shares rose to their highest point in almost 4 weeks on Tuesday as firmer financial stocks lifted the region's equity markets. Sentiment was underpinned by comments from ECB supervisory chief Daniele Nouy, who said the central bank was working on new proposals for NPLs that remain one of the biggest problems for the region's economy. Some investors remained sceptical about the market rebound, with concerns about the possibility of a US interest rate increase. (Reuters)
European shares rose to their highest point in almost 4 weeks on Tuesday as firmer financial stocks lifted the region's equity markets. Sentiment was underpinned by comments from ECB supervisory chief Daniele Nouy, who said the central bank was working on new proposals for NPLs that remain one of the biggest problems for the region's economy. Some investors remained sceptical about the market rebound, with concerns about the possibility of a US interest rate increase. (Reuters)
Asia
Japan political trend: After hosting a G7 summit this week and escorting US President Barack Obama on a visit to Hiroshima, Japanese PM Shinzo Abe was widely expected to postpone an unpopular sales tax hike, call a snap election and seek big wins in both houses of parliament. (Reuters)
Japan political trend: After hosting a G7 summit this week and escorting US President Barack Obama on a visit to Hiroshima, Japanese PM Shinzo Abe was widely expected to postpone an unpopular sales tax hike, call a snap election and seek big wins in both houses of parliament. (Reuters)
China's PM Li Keqiang said that reducing excess capacity in industry remains the key task in carrying out supply-side reform but he will ensure that workers whose jobs will be affected by the restructuring will not be left unemployed. Beijing has vowed to tackle the supply gluts in major industrial sectors and it would close 100mn-150mn tonnes of steel capacity and 500mn tonnes of coal production in the coming three to five years. (Reuters)
Commodities
Oil rose about 1% on Tuesday on a boost from Wall Street and expectations of a drawdown in US crude inventories, then prices jumped another 1% after the market close to nearly US$50 a barrel following an industry group API suggested the draw was larger than expected. US crude futures settled up 54 cents (+1.1%) at US$48.62 a barrel. Brent crude futures finished up 26 cents (+0.5%) at US$48.61, ending a four-day slide. (Reuters)
Oil rose about 1% on Tuesday on a boost from Wall Street and expectations of a drawdown in US crude inventories, then prices jumped another 1% after the market close to nearly US$50 a barrel following an industry group API suggested the draw was larger than expected. US crude futures settled up 54 cents (+1.1%) at US$48.62 a barrel. Brent crude futures finished up 26 cents (+0.5%) at US$48.61, ending a four-day slide. (Reuters)
Gold fell to the lowest in more than four weeks on Tuesday as hawkish comments from Fed officials in the previous session sent the dollar to a two-month high against a currency basket. Spot gold was down 1.5% at US$1,229.25 an ounce. US gold futures for June delivery settled down 1.8% at US$1,229.20 an ounce. (Reuters)
Source: aws.co.th / settrade.com
