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The SET surged 2.50% for the week, to close at 1,492.00 on Friday, after Japanese Prime Minister Shinzo Abe’s ruling-coalition won a landslide victory in the upper-house elections over the weekend. Abe announced a new round of fiscal stimulus spending but did not give details on the size of the package. Reuters said the details of the package are expected to be submitted to Japan’s parliament in the fall so it could still be another several months away.
The USD/THB exchange rate was quoted at 34.968 baht per dollar on Friday, down 0.6% for the week, while the
THB/JPY printed at 2.9966 yen per baht, up 4.80% for the week. The
USD/THB technical support is at 34.80 baht per dollar, while the
THB/JPY technical resistance is at 3.07 yen per baht.
According to Reuters, ex-Fed Chair Ben Bernanke visited the Bank of Japan
(BOJ) on Monday, where he may (or may not) have advised BOJ governor Haruhiko Kuroda to introduce “helicopter money” to revive the Japanese economy. “Helicopter money” is referred to as an alternative to quantitative easing (QE) when interest rates are close to zero and the economy remains weak or enters recession, where the central bank directly finances budget stimulus through programs such as perpetual bonds with no maturity date.
The Thailand 10-year bond yield climbed 1.04% for the week, to close at 1.95% on Friday. The yield spread between the Thailand 10-year bond and the benchmark U.S. 10-year Treasury Note, yielding at 1.558% on Friday, narrowed to 0.392 percentage points. The global bond markets are rattled, as the 10-year Japanese government bond
(JGB) yield dropped to negative 0.226% at the close on Friday, while the 10-year German bund yield printed at 0.003%.
Germany’s10-year bund turn positive for the first time since June 23 after speculations loom that the Fed could stay on the sidelines until September or later, and more stimulus could come from the BOJ and the Bank of England
(BOE). The probability of a 25 basis point rate hike at the September 21 FOMC meeting, based on the 30-day prices of federal funds futures, stands at 12.9%, while the probability of a no rate hike dropped to 87%, according to data from the CME Group as of July 15. The BOE decided on Thursday to leave its benchmark interest rate unchanged at a record low of 0.5%, but signaled that there may be a rate cut at the August meeting.
On Tuesday, the Thai cabinet approved earmarking 10 billion baht as seed money for the 100-billion-baht Thailand Future Fund
(TFF), which will invest in three road projects, including two highway projects and Expressway Authority of Thailand
(EXAT). The TFF, an infrastructure fund, will then raise cash from the public for the construction of state projects.
The Bank of Thailand (BOT) warned on Friday that rising unemployment posts risks to the Thai economy, according to the Bangkok Post. The National Statistical Office said Thailand's unemployment rate rose to 1.2% in May, from April's 1.04%. Household debt reached 11.1 trillion baht, or 81.1% of GDP, in the first-quarter 2016, but is down 0.5 percentage points from the 81.6% of GDP registered a quarter earlier, said the BOT.
The WTI crude oil spot price jumped 2.57% for the week, closing at $46.28 per barrel on Friday, while the Brent crude price climbed 3.35% to close at $48.11 per barrel, despite bearish reports from the International Energy Agency (IEA) and the Energy Information Administration (EIA).
The IEA said on Wednesday that there are warning signs that global oil demand is ebbing while oil stocks remain at "elevated levels," threatening a rebalancing act in the oil markets. The Paris-based agency also said the volume of oil in storage on oil tankers worldwide reached 95 million barrels at the end of June, the highest since the 2008 to 2009 recession.
Nine tankers holding about 9 million barrels of the major North Sea crude grades are floating off the U.K.’s coast, up from 7 million in May, according to a survey of oil traders and ship-tracking data compiled by Bloomberg.
The EIA weekly U.S. oil inventory report on Wednesday showed a decline of 2.5 million barrels to 521.8 million barrels in the week ending July 8, compared to S&P Global Platts analysts’ expectations for a drawdown of 3.25 million barrels. The American Petroleum Institute (API) inventory data on Tuesday showed U.S. crude inventories increased 2.2 million barrels for the week.
The shocker was the EIA report of a massive build last week in U.S. gasoline and distillate stockpiles of 1.2 million barrels and 4.1 million barrels, respectively. Analysts were expecting a decline of 125,000 barrels for gasoline and a rise of 375,000 barrels for distillates.
Separately, the EIA said the weekly U.S. crude oil production decreased by 57,000 bpd for the week ending July 8, 2016, to 8.485 million barrels per day (bpd). Weekly U.S. crude oil output has fallen about 11.71% from the peak level of 9.61 million bpd during the week ending June 6, 2015. Houston-based oilfield services company Baker Hughes Inc. said on Friday that the U.S. oil rig count was up another 6 from the previous week, to 357, compared to 316, when the rig count hit the low on June 6.
Technically, the SET broke out the trendline resistance from the February 2015 high but a shooting star chart pattern has emerged, meaning the index could pull back and consolidate under the 1,500 level. The bulls have full control over the market, indicated by a higher high uptrend chart pattern. The SET is entering overbought territory (RSI=73.03), but the MACD line stays above the signal line, meaning upside momentum is increasing.
According to the Bangkok Post, SCB Securities told their clients to pile into stocks related to domestic consumption, auto parts and personal loans, as the SET index will climb to 1,550-1,600 in the second-half of 2016, citing improved domestic consumption, bolstered by higher farm income. |
