Expect the SET to trade in a tight range today as investors try to strike a balance between fears over instability in the EU and global growth resulting from the Brexit on one hand and the Fed’s latest dovish stance on the rate hike issue and upbeat US economic data, on the other. Global investors have kept piling into negative-yielded sovereign bonds, especially the JGBs, as fresh Brexit concerns could flare up at any time. Local factors today tilt towards a negative end, particularly on news that Toyota has laid off workers at its production base here. This may not result in a drop in production as the main reason for the layoff is to replace humans with more automated production facilities.
Local issue
Thailand’s auto industry believed to remain intact. A spokesman for the Federation of Thai Industries’ automotive club said, in spite of Toyota Motor Thailand’s voluntary redundancy, it does not reflect a downturn for the industry as the number of affected workers is still marginal. The Federation also believes Thailand should have sufficient capability to generate annual car sales of up to 900,000 vehicles, based on Thai per capital income of US$6,000 a year. (Bangkok Post)
Thailand’s auto industry believed to remain intact. A spokesman for the Federation of Thai Industries’ automotive club said, in spite of Toyota Motor Thailand’s voluntary redundancy, it does not reflect a downturn for the industry as the number of affected workers is still marginal. The Federation also believes Thailand should have sufficient capability to generate annual car sales of up to 900,000 vehicles, based on Thai per capital income of US$6,000 a year. (Bangkok Post)
Comment: We believe Thailand’s automotive industry should still achieve the 2016 car sales target. However, this news reflects that there are still some obstacles for the industry and some automotive companies may be eventually affected e.g. SAT.
Global issues
More UK property funds suspended: The number of British property funds suspended after the Brexit doubled on Wednesday, leaving over £18bn (US$23bn) frozen in the biggest seizing up of investment funds since the 2008 financial crisis. Seven funds stopped redemptions and suspended operations after a wave of investors asked for their money back amid worries over a likely drop in property prices. (Reuters) Comment: This could trigger a crisis of confidence in the banking system of the UK or even in Europe.
More UK property funds suspended: The number of British property funds suspended after the Brexit doubled on Wednesday, leaving over £18bn (US$23bn) frozen in the biggest seizing up of investment funds since the 2008 financial crisis. Seven funds stopped redemptions and suspended operations after a wave of investors asked for their money back amid worries over a likely drop in property prices. (Reuters) Comment: This could trigger a crisis of confidence in the banking system of the UK or even in Europe.
US benchmark and long-dated Treasury yields finished slightly higher on Wednesday on profit taking after hitting record lows during the session on global growth concerns stemming from the Brexit. Benchmark 10-year US Treasury yields hit 1.321%, while 30-year Treasury yields hit 2.098%. Those were unprecedented lows for both. (Reuters)
The yen rose on Wednesday, while sterling plummeted to a 31-year low on mounting worries about the impact of the Brexit on the global economy. The yen soared to a 3-1/2 year high against sterling, and climbed to two-week peaks versus the dollar and euro. Sterling fell below US$1.28 against the dollar for the first time since 1985 on fears of foreign outflows and interest rate cuts by the BOE. It settled at US$1.2939, down 0.9%. (Reuters)
USA
Wall Street shares finished higher on Wednesday as the Federal Reserve’s minutes for 14-15 Jun meeting indicated it will refrain from any rate hike soon on serious concerns over the implications of the Brexit vote and a recent slowdown in the US job market. (Reuters)
Wall Street shares finished higher on Wednesday as the Federal Reserve’s minutes for 14-15 Jun meeting indicated it will refrain from any rate hike soon on serious concerns over the implications of the Brexit vote and a recent slowdown in the US job market. (Reuters)
US ISM services index hits 7-month high in June. The ISM said its index of non-manufacturing activity rose to 56.5 from 52.9 in May. The reading was above expectations of 53.3 from a Reuters poll of 62 economists and was the highest reading since November. New orders climbed to 59.9 from 54.2. (CNBC)
Europe
European stocks fell on Wednesday, led lower by major banks and other financial stocks as worries persist about the impact of Britain's vote to leave the European Union. (Reuters)
European stocks fell on Wednesday, led lower by major banks and other financial stocks as worries persist about the impact of Britain's vote to leave the European Union. (Reuters)
Asia
The yuan fell to its lowest against the dollar since November 2010 earlier on Wednesday, extending its slide to a fifth straight session, after China's central bank sharply weakened its official guidance rate as the dollar surged. (Reuters)
The yuan fell to its lowest against the dollar since November 2010 earlier on Wednesday, extending its slide to a fifth straight session, after China's central bank sharply weakened its official guidance rate as the dollar surged. (Reuters)
The yields on the benchmark 10-year Japanese government bond and other long JGBs fell to record lows on Wednesday, as a renewed bout of turmoil struck financial markets amid worries over the global economic fallout from the Brexit. The 10-year yield fell 1 basis point to minus 0.265%, while the 20-year JGB yield fell 1.5 basis points to 0.015% after earlier touching a record low of zero. The 30-year JGB yield also shed 2.5 basis points to a record low of 0.030%. (Reuters)
Comment: Foreign investors have continued to pile into negative-yield JGBs on expectations the BOJ will buy these bonds at higher prices for its bond-purchasing scheme under the QQE. They also expect to reap FX gains on the yen appreciation trend.
Commodities
Oil prices rose almost 2% on Wednesday as robust US economic data lifted crude futures from two days of declines, although a gasoline glut and woes from Brexit suggested more pressure ahead. Brent crude settled up 84 cents (+1.8%) at US$48.80 a barrel. US crude futures gained 83 cents (+1.8%) to settle at US$47.43. (Reuters)
Oil prices rose almost 2% on Wednesday as robust US economic data lifted crude futures from two days of declines, although a gasoline glut and woes from Brexit suggested more pressure ahead. Brent crude settled up 84 cents (+1.8%) at US$48.80 a barrel. US crude futures gained 83 cents (+1.8%) to settle at US$47.43. (Reuters)
Gold pared gains after rising to the highest in more than two years on Wednesday, as US equities reversed early losses, Treasury yields turned higher and investors bought bullion as a haven from risk. Spot gold was up 0.6% at US$1,363.36 an ounce after reaching a peak of US$1,374.91, its highest since March 2014. US gold futures for August delivery settled up US$8.4 (+0.6%) at US$1,367.10 per ounce. (Reuters)
Source: aws.co.th / settrade.com
