Expect the SET to trade lower today trailing most global bourses as investors are expected to take a cautious stance after oil turned lower and there was a mixed bag of US economic data. The Fed’s two key data, US consumer spending and PCE inflation, were still in favour of the Fed rate hike ahead of the allimportant job report on Friday. Local factors today slightly tilt towards a positive end. The BOT looks for 2Q16 GDP growth matching 3.2% growth in 1Q16 which is not bad. Factory output also rose for a second-straight month in April. The government’s new double tax breaks and decision to joint TPP are all positive.
Local issue
Ready to join TPP Deputy Prime Minister Somkid Jatusripitak yesterday clarified Thailand’s position on the Trans Pacific Partnership (TPP), stating that the country is ready to join the regional trade bloc as soon as it is open for new membership. His speech was delivered at Nikkei Forum 22 International Conference on the Future of Asia (2016) in Tokyo. He further said Thailand will seek support from member countries, including Japan and will also hold public hearings to obtain feedback from every stakeholder. (Bangkok Post)
Ready to join TPP Deputy Prime Minister Somkid Jatusripitak yesterday clarified Thailand’s position on the Trans Pacific Partnership (TPP), stating that the country is ready to join the regional trade bloc as soon as it is open for new membership. His speech was delivered at Nikkei Forum 22 International Conference on the Future of Asia (2016) in Tokyo. He further said Thailand will seek support from member countries, including Japan and will also hold public hearings to obtain feedback from every stakeholder. (Bangkok Post)
2Q16 growth likely to match with 1Q16. Economic growth in 2Q16 is anticipated to stay at the same level as 1Q16’s growth of 3.2% YoY, according to a senior director from Bank of Thailand. Despite 2Q16 being a low season for tourism, public expenditure and service sector will act as the main economic growth drivers whereas global economic conditions in 2Q16 are expected to not deteriorate if there is no unexpected event on a global level. Meanwhile, private investment remains low and not broad-based as it has been concentrated only in telecommunication and renewable energy sectors. (Bangkok Post)
Double tax breaks approved. The cabinet yesterday approved a plan to double tax breaks for private investors this year in a bid to spur investment. With this plan, investors will be able to double their tax deductions if they start a project or commence construction this year and new projects are not required to be completed within a year. (Bangkok Post)
Factory output rose for second-straight month. The Industry Ministry reported yesterday that the Manufacturing Production Index (MPI) for April increased 1.54% YoY, marking two consecutive months of increase after a 2.2% YoY rise in March. April’s output rise was attributed to cars and car parts, air conditioners, and petroleum. However, the recovery remains fragile with both exports and weak domestic consumption. (Bangkok Post)
Global issues
US Treasury debt yields slipped from multi-week highs on Tuesday, after US stocks fell following a mixed batch of economic data. Yields on US 2-year notes, the maturity most sensitive to Fed rate expectations, fell from their strongest level in more than two months hit earlier in the session. The benchmark 10-year Treasury notes were down 2/32 in price for a yield of 1.842%, down from 1.854% last Friday. (Reuters)
US Treasury debt yields slipped from multi-week highs on Tuesday, after US stocks fell following a mixed batch of economic data. Yields on US 2-year notes, the maturity most sensitive to Fed rate expectations, fell from their strongest level in more than two months hit earlier in the session. The benchmark 10-year Treasury notes were down 2/32 in price for a yield of 1.842%, down from 1.854% last Friday. (Reuters)
The dollar took a step back from a two-month high against a basket of major currencies today after a mixed bag of US economic data slightly tempered expectations of a near-term Federal Reserve rate hike. The dollar index pulled back from Monday's two-month peak of 95.895 to stand at 95.802. (Reuters)
USA
Wall Street shares closed mostly down on Tuesday dragged by energy shares as oil turned lower. Economic data released on Tuesday were mixed. Investors will be parsing through more data, including Friday's employment report, to gauge whether the US Federal Reserve will raise interest rates as soon as its 14-15 June meeting. (Reuters)
Wall Street shares closed mostly down on Tuesday dragged by energy shares as oil turned lower. Economic data released on Tuesday were mixed. Investors will be parsing through more data, including Friday's employment report, to gauge whether the US Federal Reserve will raise interest rates as soon as its 14-15 June meeting. (Reuters)
US consumer spending recorded its biggest increase in more than six years in April as households stepped up purchases of automobiles. Consumer spending, which accounts for more than 2/3 of US economic activity, surged 1.0% last month. Last month's increase was the largest since August 2009 and beat economists' expectations for a 0.7% rise. (Reuters)
Inflation crept up: The personal consumption expenditures (PCE) price index, excluding the volatile food and energy components, rose 0.2% in April after edging up 0.1% in March. That left the increase in the YoY core PCE rate at 1.6%. The core PCE is the Fed's preferred inflation measure and is running below its 2% target. (Reuters)
Consumer confidence dips in May. The Conference Board reported its consumer confidence index slipped to 92.6 in May from a reading of 94.7 April. (Reuters)
Manufacturing in Midwest slowed in May. The Institute for Supply Management-Chicago said its business index fell 1.1 points to a reading of 49.3 in May, indicating a contraction in manufacturing activity in the Midwest. (Reuters)
Europe
European shares fell on Tuesday, hit by weakness among banking stocks and Volkswagen, whose shares retreated after the carmaker reported 1Q16 earnings. The market has had an element of support of late from the euro's relative weakness against the US dollar, which typically helping European exporters. (Reuters)
European shares fell on Tuesday, hit by weakness among banking stocks and Volkswagen, whose shares retreated after the carmaker reported 1Q16 earnings. The market has had an element of support of late from the euro's relative weakness against the US dollar, which typically helping European exporters. (Reuters)
Two opinion polls showed an increasing support for the "leave" camp, surprising investors who had recently bet the chance of "Brexit" would be slim. The pound licked wounds at US$1.4487, having fallen 1.1% on Tuesday. (Reuters)
Asia
PM Shinzo Abe is expected to formally announce a delay to next year's proposed sales tax hike to prevent a blow to the economy in a press conference at 0900 GMT today. His plan to delay the tax hike and adopt new fiscal stimulus measures has fanned speculation the BOJ could adopt further monetary easing as early as this month. (Reuters)
PM Shinzo Abe is expected to formally announce a delay to next year's proposed sales tax hike to prevent a blow to the economy in a press conference at 0900 GMT today. His plan to delay the tax hike and adopt new fiscal stimulus measures has fanned speculation the BOJ could adopt further monetary easing as early as this month. (Reuters)
Japanese capital expenditure in 1Q16 rose 1.4% QoQ and 4.2% YoY. Capital expenditure accelerated QoQ but slower YoY than a 8.5% annual gain in 4Q15. This suggests GDP growth forecast could be revised up. A preliminary estimate showed GDP in 1Q16 expanded 1.7% YoY. The capital expenditure component of the GDP forecast fell 1.4% QoQ. (Reuters)
Japan’s corporate profits fell 9.3% YoY in 1Q16, the biggest decline since 4Q11, finance ministry data showed on Wednesday. (Reuters)
China's services industry continued to expand in May but at a slower pace than the previous month, an official survey showed on Wednesday. The official non-manufacturing PMI stood at 53.1 in May, compared with the previous month's reading of 53.5 but still well above the 50-point mark that separates growth from contraction on a monthly basis. (Reuters)
China's manufacturing sector expanded marginally in May. The official manufacturing PMI for May was unchanged at 50.1. Analysts polled by Reuters had predicted a reading of 50.0. (Reuters)
China stocks posted their biggest daily gain in three months on Tuesday, closing at three-week highs, with financials leading a broad rally as investors bet that MSCI will add mainland shares to its index for the first time. (Reuters)
Commodities
Oil prices dipped on Tuesday as a stronger dollar and slide in equity prices sparked profit-taking, but crude futures posted a fourth straight monthly gain as investors bet that the global glut was slowly easing. Brent crude futures for July settled down 7 cents at US$49.69 a barrel before expiring as the spot contract. US crude futures for July settled down 23 cents (-0.5%) from Friday’s close at US$49.10 from. (Reuters)
Oil prices dipped on Tuesday as a stronger dollar and slide in equity prices sparked profit-taking, but crude futures posted a fourth straight monthly gain as investors bet that the global glut was slowly easing. Brent crude futures for July settled down 7 cents at US$49.69 a barrel before expiring as the spot contract. US crude futures for July settled down 23 cents (-0.5%) from Friday’s close at US$49.10 from. (Reuters)
Gold rose 1% on Tuesday, rebounding from the prior session's three-and-a-half-month low, but remained on track for its biggest monthly decline since November on dollar strength and growing expectations of an imminent US interest rate hike. Spot gold was up 1% at US$1,216.80 an ounce. (Reuters)
Source: aws.co.th / settrade.com
