• Upbeat economic data reinforces view of US economic recovery, Fed rate hike in play: The DJIA surged by 213 points on Tue, led by a rally in financial shares after data showing US new home sales rose to a more than 8-year high in Apr supported the view of the US economic recovery while investors started to price in a higher probability of a Fed rate hike.
• Oil prices regain ground on expectations of dwindling supply: WTI crude oil futures settled 1.1% higher at US$48.62/barrel on Tue on expectations that the EIA would report a drawdown in US crude inventories due to the effect of supply outage after Canadian wildfire and a report that Iraq’s total oil output dropped from record levels at the start of the year.
• SETI poised for short-term rebound to retest key 1400-point barrier: In view of today’s bullish sentiment buoyed by overseas stock market gains and rising oil prices, the SET index could be headed for a retest of a key 1400-point barrier but market fundamentals may not be strong enough to support a strong rally in terms of valuation after consensus EPS downgrades, light trading volume and a lack of buying support from key investor groups. At 15x forward FY16 P/E, the market’s valuation is also no longer cheap. The trading range for the SET index is expected to be between 1380-1400 points today.
• Short-term strategy: To play current market conditions, we recommend trading within the above trading range after the SET index can hold above a key 1380-point support level.
(1) Tourism recovery play: Hold onto AOT.
(2) Selective play: Hold onto LOXLEY and take long positions on BBL after a sharp share price retreat puts it at a mere 0.8x P/BV and the stock is now trading near oversold levels.
Source: poems.in.th / settrade.com
