Thai shares are likely to fall today in line with global equities on worries about Britain potentially pulling out of the European Union and its adverse impact on the sluggish European economies. Meanwhile, safe haven assets, such as US Treasuries, German bund, the yen, Swiss franc are in demand. Adding to the negative tone, Chinese shares come under pressure after MSCI declined to add Chinese A shares to its emerging market index. There is no new catalyst on the local front to bolster the market today although the move by TAT to join with Emirates to boost visibility of Thailand through the airline’s global network will benefit Thailand tourism industry.
Local issue
Cabinet approved public procurement draft. The cabinet yesterday approved a draft bill on public procurement, which will govern purchases made not only by all state agencies, but also by local administrative organizations, public organizations, state enterprises, and other independent organizations established under the constitution. The move is made to enhance the country’s competitiveness as all public procurements would be standardized and transparent. (Bangkok Post)
Cabinet approved public procurement draft. The cabinet yesterday approved a draft bill on public procurement, which will govern purchases made not only by all state agencies, but also by local administrative organizations, public organizations, state enterprises, and other independent organizations established under the constitution. The move is made to enhance the country’s competitiveness as all public procurements would be standardized and transparent. (Bangkok Post)
TAT teams with Emirates. Tourism Authority of Thailand (TAT) and Dubai-based airline Emirates have signed a memorandum of understanding (MoU) to increase tourism and visibility for Thailand through the airline's global network. The promotions are geared towards niche markets such as green tourism, sport, luxury travel, weddings and honeymoons and medical health, while also including the possibility of Emirates launching new routes from Dubai to other key destinations in Thailand such as Chiang Mai and U-tapao near Pattaya. (Bangkok Post)
Global issues
Traders see virtually no chance of a rate hike on Wednesday, according to CME Group's FedWatch tool. They are pricing in a 21% chance of a rate hike in July, a 40% chance in September and a 59% chance in December. The focus has changed to the number of hikes Federal Reserve participants see through the year. (Reuters)
US Treasury yields fell to four-month lows on Tuesday as growing fears about Britain leaving the EU weighed on risk appetite and further pared expectations of a Fed interest rate hike this year. Benchmark 10-year US Treasury notes rose 6/32 in price to yield 1.596%. Yields had earlier fallen to 1.567%. (Reuters)
The yen surged to its highest in more than three years against the euro on Tuesday as chances of Britain voting next week to leave the EU grew, prompting a flight to safe havens such as the Japanese currency. In mid-morning trading, the euro was down 1.0% against the yen at ¥118.84, while the dollar slid 0.3% to ¥105.98. (Reuters)
USA
Wall Street shares ended down for a fourth consecutive session on Tuesday as investors worried about an upcoming referendum in Britain on whether to leave the EU while the Federal Reserve began its two-day meeting on its monetary policy stance. Financial shares led the market down as investors saw virtually no chance of a rate hike on Wednesday. One bright spot was a better-than-expected 0.5% rise in US retail sales in May. (Reuters)
US retail sales rose strongly in May as Americans bought automobiles and a range of other goods suggesting that economic growth was gaining steam. Retail sales increased 0.5% last month after surging by 1.3% in April. The second straight month of gains boosted sales 2.5% YoY. Excluding automobiles, gasoline, building materials and food services, retail sales rose a solid 0.4% last month after an upwardly revised 1.0% increase in April. (Reuters)
Steady build-up of inflation: Import prices increased 1.4% in May, the largest rise since March 2012, after advancing 0.7% in April. In the 12 months through May, import prices fell 5.0%, the smallest decline since November 2014. (Reuters)
The Atlanta Fed raised its 2Q16 GDP growth estimate by three-tenths of a percentage point to a 2.8% rate based on May's broad increase in retail sales, which would drive consumer spending in 2Q16 to grow by 3%-4% YoY. The economy grew at a 0.8% rate in 1Q16. (Reuters)
Europe
European shares fell for a fifth straight session on Tuesday on angst over next week's referendum on Britain's membership in the EU and uncertainty over the outcome of a two-day US Federal Reserve meeting that starts later in the day. (Reuters)
European shares fell for a fifth straight session on Tuesday on angst over next week's referendum on Britain's membership in the EU and uncertainty over the outcome of a two-day US Federal Reserve meeting that starts later in the day. (Reuters)
Asia
Japanese Finance Minister Taro Aso issued a fresh warning against renewed strength in the yen, saying that he would "firmly respond" if rapid and speculative moves persisted in the foreign exchange market. Aso also said he would closely watch Britain's referendum next week on exiting the EU, given its potential to disrupt global financial markets. (Reuters)
Japanese Finance Minister Taro Aso issued a fresh warning against renewed strength in the yen, saying that he would "firmly respond" if rapid and speculative moves persisted in the foreign exchange market. Aso also said he would closely watch Britain's referendum next week on exiting the EU, given its potential to disrupt global financial markets. (Reuters)
Many in BOJ prefer to keep policy steady: A renewed spike in the yen is adding to headaches for BOJ policymakers meeting for a rate review this week, but many of them still appear to prefer to hold off on expanding stimulus despite signs of weakening inflation. (Reuters)
MSCI Inc on Tuesday declined to add domestic Chinese stocks to one of its key benchmarks, concluding that Beijing had more work to do in liberalizing capital markets and delivering a blow to Chinese policymakers hoping to broaden the appeal of their currency. This is the third year running that MSCI has rejected Chinese A-shares, after first floating the idea of adding them in 2013. MSCI said it would consider the China A shares' inclusion as part of its 2017 review. Inclusion could prompt asset managers, pension funds and insurers to pour up to US$400bn of funds into China's equity markets over the next decade. (Reuters)
China expressed thanks on Tuesday for the countries that have offered support for its position on a case brought by the Philippines over Chinese claims in the South China Sea. China has stepped up its rhetoric ahead of an expected ruling by the Permanent Court of Arbitration in The Hague on the Philippine case. China refuses to recognise the case and says all disputes should be resolved through bilateral talks. (Reuters)
Commodities
Oil prices fell more than 1% on Tuesday, down for a fourth straight day, pressured by investor nervousness over Britain's vote next week on whether to leave the EU, which overshadowed signs of a return to health for crude after a two-year glut. Brent crude oil futures fell 72 cents to US$49.63 a barrel, while US crude futures lost 45 cents to US$48.33. (Reuters)
Oil prices fell more than 1% on Tuesday, down for a fourth straight day, pressured by investor nervousness over Britain's vote next week on whether to leave the EU, which overshadowed signs of a return to health for crude after a two-year glut. Brent crude oil futures fell 72 cents to US$49.63 a barrel, while US crude futures lost 45 cents to US$48.33. (Reuters)
Gold hit its highest level in almost six weeks on Tuesday, rising on worries about a potential British exit from the EU and expectations the Fed will not raise interest rates at its June meeting. Spot gold rose as high as US$1,289.80 an ounce earlier and was up 0.1% at US$1,285.06 an ounce. (Reuters)
Source: aws.co.th / settrade.com
