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The SET bumped into the lower trendline support of the ascending wedge chart pattern, to close at 1,538.76 on Friday, down 0.89% for the week, despite a strong rebound of crude oil prices and a better-than-expected second-quarter GDP report. The National Economic and Social Development Board
(NESDB) said on Monday that the Thai GDP rose 3.5% year-on-year in the second-quarter, compared with 3.2% in the first-quarter, with growth in the first-half of 2016 at 3.4%.
Shares of Airports of Thailand PCL (SET:AOT) and Central Plaza Hotel PCL
(SET:CENTEL) tumbled 5.48% and 2.91%, respectively, for the week on concerns whether tourism will bounce back soon after the bombings in southern Thailand's prime tourist locations that killed four people and wounded dozens of others. The sell-off may be overdone, as AOT reported strong July total air traffic of 66,392 takeoffs and landings, up 9.44% year-on-year.
The USD/THB exchange rate was quoted at 34.64 baht per dollar on Friday, down another 0.37% for the week, while the
THB/JPY printed at 2.8932 yen per baht, down 1.13% for the week. The
USD/THB technical resistance is at 34.74 baht per dollar, or 23.6% Fibonacci
retracement, while the THB/JPY technical resistance is at 3.07 yen per
baht.
The Thailand 10-year bond yield jumped 1.45% for the week, to close at 2.1% on Friday. The yield spread between the Thailand 10-year bond and the benchmark U.S. 10-year Treasury Note, yielding at 1.58% on Friday, narrowed to 0.52 percentage points.
The BOT has been using policy tools, including intervention in the currency market, to curb the rapid rise of the
baht, said a senior central bank official, according to the Bangkok Post. Thai capital markets recorded US $1.1 billion worth of offshore fund inflows in August alone, thanks to the strong
baht, while the net buys of foreign investors on the Thailand SET registered 25.77 billion baht so far this month. Capital inflows could be affected if the BOT continues its baht intervention.
The WTI crude oil spot price continued to skyrocket, to close on Friday at $49.11 per barrel, up 10.38% for the week, while the Brent crude price jumped 7.8% for the week to close at $ 50.85 per barrel, following a bullish EIA oil inventory report and comments from Russia Energy Minister Alexander Novak who told Saudi-owned newspaper Asharq al-Awsat on Monday that a complete return of market stability is only likely in 2017 and dialogue with Saudi Arabia regarding a possible deal aimed at achieving long-term oil market stability has progressed in "a tangible way", according to a Reuters report. The crude prices also got support from a weakening U.S. dollar.
Iran is still a wild card though, as its officials said in April that Iran wouldn't participate in any negotiations until it restored production to pre-sanction levels, between 4 million and 4.2 million barrels per day (bpd), according to a Bloomberg report. On Tuesday, an Iranian press official told the Wall Street Journal that the country likely would not be pumping that much oil by September, ahead of OPEC’s informal meeting.
The EIA weekly U.S. oil inventory report on Wednesday showed a decline of 2.51 million barrels to 521.1 million barrels, excluding strategic inventories, in the week ending August 12, compared to S&P Global Platts analysts’ expectations for a drawdown of 200,000 barrels. The American Petroleum Institute (API) inventory data on Tuesday showed a U.S. crude inventory drawdown of 1.0 million barrels for the week.
There was a decline last week in U.S. gasoline supplies of 2.7 million barrels, while distillate stockpiles, including jet fuel, diesel fuel and heating oil, increased by 1.9 million barrels, according to the EIA. Analysts were expecting a drawdown of 1.8 million barrels of gasoline stocks and a drop of 500,000 barrels for distillates.
Separately, the EIA said the weekly U.S. crude oil production increased by 152,000 bpd for the week ending August 12, 2016, to 8.597 million bpd. Weekly U.S. crude oil output has fallen about 10.54% from the peak level of 9.61 million bpd during the week ending August 12, 2015. Houston-based oilfield services company Baker Hughes Inc. said on Friday that the U.S. oil rig count was up another 10 from the previous week, to 406, compared to 316, when the rig count hit the low on June 6, 2016. |
