Oil down sharply on demand worries: WTI crude oil prices tumbled sharply to US$46/barrel on Tue due probably to demand concerns after Bank of England Governor Mark Carney said Brexit might exacerbate the already slowing global economy.
Eyes on Fed minutes & ADP employment report: In focus today will be (i) the minutes of the Fed’s latest policy meeting in Jun to look for clues about Brexit’s effect on Fed rate hike path and (ii) ADP employment report, which is viewed as the economic highlight of the week after nonfarm payrolls data missed expectations in the prior month. If there is no rebound in jobs data, it could add more fuel to global growth fears.
Pullback seen on global economic worries and falling oil prices while current valuation levels warrant profit-taking: The SET index is currently trading at nearly 16x forward P/E (~1460 points), the highest P/E levels in nearly 2 years. In addition to the current stretched valuation that warrants profit-taking, global economic concerns and sliding oil prices, which would exert pressure on energy counters may set Thai stocks up for a pullback today. Bank earnings season which is due to kick off next week also bears close watching as banks contribute a large share of the overall market EPS and the total market cap. Any earnings misses could possibly knock the market into correction. The trading range for the SET index is seen at 1432, 1440-1455 points today.
Investment strategy: To play current market conditions, a selective strategy remains the preferred choice. Any rallies should be used as profit-taking pportunities.
(1) Tourism recovery play: Hold onto AOT.
(2) Selective play: Hold onto PTTGC, go long MAJOR and cut loss in short THAI position.
(3) Upside momentum play: Hold onto TWPC, ERW.
(1) Tourism recovery play: Hold onto AOT.
(2) Selective play: Hold onto PTTGC, go long MAJOR and cut loss in short THAI position.
(3) Upside momentum play: Hold onto TWPC, ERW.
Source: poems.in.th / settrade.com
