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The SET closed down 0.99% for the short trading week at 1,390.70 on Wednesday, up 7.97% year-to-date. The Thai stock market sold off ahead of the nonfarm payrolls report for April from the U.S. Labor Department, which came in on Friday at 160,000, while the unemployment rate remained unchanged at 5%. It was a big miss, as economists were expecting 205,00 jobs added.
The U.S. economy under Obama has been a disappointment since nonfarm payrolls has steadily declined, from 295,000 jobs added in October 2015 to 160,000 added in April 2016, while hourly wages inched up a mere 1.13% from $21.21 per hour to $21.45 per hour during the same period, due in part to rising minimum wages in some states and cities.
It is up in the air as to how the Asian markets will respond on Monday to the tepid U.S. jobs report. Leading Democratic U.S. presidential candidate Hillary Clinton may have a hard time explaining to the people why the economy is doing poorly. The incumbent party doesn't look good going into the general election in November if the U.S. economy is heading south.
The USD/THB exchange rate was quoted at 35.115 baht per dollar on Friday, down 2.54% since the beginning of the year, while the
CNY/THB has declined 2.95% year-to-date, to close at 5.4029 baht per
yuan. The U.S. dollar index bounced 0.92% to close on Friday at 93.883, slightly above the technical support of 93.78.
Mr. Chen Namchaisiri, chairman of the Federation of Thai Industries
(FTI), said on Wednesday that a stronger baht would cut export values in baht terms and could have a negative impact on the economy. "We are worried about the strengthening baht as the currency is the key factor that will have an impact on the economy," Mr. Chen told the Bangkok Post.
A survey by the University of the Thai Chamber of Commerce
(UTCC) showed on Tuesday that the consumer confidence index had dropped to 72.7 points in April, the lowest reading since October 2015. "People in many areas are also increasingly concerned about the adverse impact of the drought, which may affect farm production and income.", said
UTCC. Thailand's retail industry grew 2.6% in the first-quarter this year, but missed the 3% earlier projected target by the Thai Retailers Association
(TRA), because of weak consumer purchasing power, according to the Bangkok Post.
The Thailand 10-year bond yield continued to move higher, as it closed at 1.84% on Friday, down 27.78% year-to-date, after plunging to a record low at 1.555% on April 7. The yield spread between the Thailand 10-year bond and the benchmark U.S. 10-year Treasury Note, yielding at 1.779% on Friday, is 0.041 percentage points.
Since May 2015, the SET index and WTI crude oil price are highly correlated with a coefficient of 0.84 over a 200-day period, where 1 is total positive correlation. The WTI crude oil spot price was down 3.11% for the week, at $44.56 per barrel on Friday, as the U.S. dollar firmed and crude inventory rose above expectations.
The Energy Information Administration (EIA) weekly U.S. oil inventory report on Wednesday showed a build of 2.8 million barrels in the week ending April 29, compared to analysts’ expectations for a 1.4 million barrel build. The American Petroleum Institute (API) inventory data on Tuesday showed a 1.3 million barrel build. The EIA also said the weekly U.S. crude oil production fell again for the fourteenth consecutive week, to 8.825 million barrels per day (bpd) for the week ending April 29, 2016, the lowest level since September 24, 2014, at 8.837 million bpd. Weekly U.S. crude oil output, however, has fallen 8.17% from the peak level of 9.61 million bpd during the week ending June 6, 2015.
More bullish news for the oil market came from Houston-based oilfield services company Baker Hughes Inc., who said on Friday that the U.S. oil rig count is now down another 4 to 328, a 79.61% drop from the peak number of 1,609 in October 2014.
Crude oil prices got some support by reports of the uncontrolled wildfire in Canada’s province of Alberta on Wednesday, which shut down one major oil sands mining operation and forced another to curtail production. Canada’s total oil sands production is around 2 million bpd, much of which is exported to the U.S.
From our technical viewpoint, the SET has been pulling back from the April high of 1,432.25, but continues to stay in the ascending channel. A bullish golden cross, or the 50-day and 200-day SMA crossover, has emerged. The 50-day SMA (green line) and 200-day SMA (red line) are running parallel to, or have merged into, the trendlines, meaning the market is highly black box traded. Since the SET index and WTIC are positively correlated, they move in the same direction, up or down. Hence, keep an eye on the
WTIC. |
