Thai shares look set to move in a tight range today as investors are likely to be cautious ahead of the BOJ’s decision later in the day on whether or not it will match PM Abe’s hefty US$265bn fiscal stimulus with monetary expansion of an equal magnitude. The other main focus is the US 2Q16 GDP due later today, which could support the Fed’s decision to hike rate earlier than the market expectation. Local factors today are mixed. The MOF’s confidence that the economy will grow a solid 3.3% this year, despite sluggish global growth, is definitely positive. However, the unresolved financing scheme for the joint Thai-Chinese 252KM rail project and lower-than-expected factory output in June are negatives.
Local issue
FPO reiterated 3.3% economic growth. The Fiscal Policy Office (FPO) has kept its GDP growth projection unchanged at 3.3% this year, with the boost from the government’s investments and robust tourism industry. However, it has cut its FY16 export forecast to a contraction of 1.9%, from a contraction of 0.7%. (Bangkok Post)
FPO reiterated 3.3% economic growth. The Fiscal Policy Office (FPO) has kept its GDP growth projection unchanged at 3.3% this year, with the boost from the government’s investments and robust tourism industry. However, it has cut its FY16 export forecast to a contraction of 1.9%, from a contraction of 0.7%. (Bangkok Post)
Comment: In spite of the cloudy export outlook, Thailand’s overall economic growth seems to be on course. Though FPO’s GDP forecast is above BoT’s forecast of 3.1%, it is still in line with NESDB projection of 3-3.5%.
New GSB scheme to assist low-income earners. According to Deputy Prime Minister Somkid Jatusripitak, the new financial packages for low-income earners, community enterprises, and existing customers of the Government Savings Bank (GSB) are set to go before the cabinet next week. One of the packages includes soft loans for general borrowers with zero interest in the first year and 1% in the second or the third year. However, further details are not yet available. (Bangkok Post)
Thai-Chinese rail budget remains unclear. The 12th meeting between Thai and Chinese authorities on the joint 252.5km rail project still failed to come up with a clear cost estimate, but the Transport Ministry said cost will certainly not be greater than Bt179bn. Budget spending on a feasibility study and future expenses related to training courses for Thai staff, both based on Beijing’s calculations, are two unresolved issues remaining. (Bangkok Post)
Global issues
The main focus today is the BOJ’s decision after its two-day policy meeting. The central bank is under pressure from the Japanese government to come up with specific steps for expanding monetary stimulus to address signs of weakness in inflation. (Reuters)
US Treasury prices were little changed on Thursday, with longer-dated yields dropping to two-week lows, as the possibility of more stimulus from the BOJ offset softer-than-expected readings on traded goods and jobless claims. Benchmark 10-year Treasury notes were up 1/32 in price for a yield of 1.506%, down 1 basis point from Wednesday, while the 30-year bond was flat, yielding 2.228%. (Reuters)
The dollar weakened against major currencies on Thursday. The dollar index, which tracks the greenback against a basket of six major rivals, fell 0.34% to 96.726. The dollar gained 0.04% to ¥104.44. The euro rose 0.15% to US$1.1072. (Reuters)
USA
Wall Street shares mostly rose on Thursday in anticipation of results from tech heavyweights Alphabet and Amazon.com. The market initially were dragged lower by Ford Motor’s poor 2Q16 profit. The US market was range-bound for a second week. (Reuters)
Wall Street shares mostly rose on Thursday in anticipation of results from tech heavyweights Alphabet and Amazon.com. The market initially were dragged lower by Ford Motor’s poor 2Q16 profit. The US market was range-bound for a second week. (Reuters)
US jobless claims rose more than expected last week, but the underlying trend continued to point to sustained labor market strength. The number increased 14,000 to a seasonally adjusted 266,000 for the week ended 23 Jul. Economists had forecast initial claims rising to 260,000 in the latest week. Claims have now been below 300,000, a threshold associated with a healthy labor market, for 73 consecutive weeks, the longest stretch since 1973. (Reuters)
US trade deficit widened in June: US trade deficit was US$63.3bn in June, up US$2.2bn from US$61.1bn in May. Exports of goods for June were US$120.2bn, US$1.1bn more than May exports. Imports of goods for June were US$183.5bn, US$3.3bn more than May imports. (US Census Bureau)
The US government is expected to report later today that US GDP increased at a 2.6% annual rate in 2Q16 after rising at a 1.1% pace in 1Q16 and 1.4% in 4Q15, according to a Reuters survey of economists. (Reuters)
New orders for US manufactured capital goods rose less than expected in June amid weak demand for machinery, suggesting an ongoing downturn in business spending. Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, increased 0.2% last month after decreasing 0.5 percent in May. (Reuters)
Europe
European shares fell on Thursday with Lloyds leading a weaker financial sector lower and disappointing earning updates from firms including oil major Royal Dutch Shell also weighing. (Reuters)
European shares fell on Thursday with Lloyds leading a weaker financial sector lower and disappointing earning updates from firms including oil major Royal Dutch Shell also weighing. (Reuters)
Asia
Japan's industrial output rose 1.9% in June, in a sign that demand is starting to pick up. That compared with the median estimate for a 0.7% increase in a Reuters poll of economists. Manufacturers surveyed by the Ministry of Economy, Trade and Industry expect output to rise 2.4% in July and increase by 2.3% in August. (Reuters)
Japan's industrial output rose 1.9% in June, in a sign that demand is starting to pick up. That compared with the median estimate for a 0.7% increase in a Reuters poll of economists. Manufacturers surveyed by the Ministry of Economy, Trade and Industry expect output to rise 2.4% in July and increase by 2.3% in August. (Reuters)
Japanese retail sales fell 1.4% YoY in June, slightly less than a median forecast for a 1.5% decline, government data showed on Friday. (Reuters)
Japan's core consumer prices fell 0.5% YoY in June, matching a decline last recorded in March 2013. The core CPI, which includes oil products but excludes fresh food prices, was lower than economists' median estimate for a 0.4% annual fall. The so-called core-core inflation index, which excludes food and energy prices, rose 0.4% in the year to June. (Reuters)
Chinese bank regulators are cracking down on short-term investments. They are going to bar smaller lenders from the riskier and most lucrative US$3.5tn market for wealth management products. The move should help to protect savers and limit the hazards caused by repackaging loans as short-term investments. Authorities want to prevent banks with net capital of less than 5bn yuan (US$750mn) and less than three years' experience in the industry from issuing anything other than simple investment products backed by assets like cash and bonds. (Reuters)
Commodities
Oil prices settled down nearly 2% on Thursday, hitting April lows and with US crude headed for its biggest monthly loss in a year, on growing worries that the world was pumping more crude than needed. US crude's WTI futures settled down 78 cents (-1.9%) at US$41.14 a barrel. Brent crude futures fell 77 cents (-1.8%) to settle at US$42.70. (Reuters)
Gold turned lower after hitting a two-week peak on Thursday as the dollar pared losses and US stocks climbed from their lows ahead of a possible BOJ announcement to expand monetary stimulus on Friday. Spot gold was down 0.3% at US$1,335.60 an ounce. US gold futures for August delivery settled up 0.4% at US$1,332.30. (Reuters)
Source: aws.co.th / settrade.com
