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The SET index gained 0.59% for the week to close on Friday at 1,494.53, despite Donald Trump’s surprising victory on November 9 and a decision by the Bank of Thailand's Monetary Policy Committee to keep its interest rate unchanged on Wednesday at 1.5%. Since the index lost 0.59% a week earlier, the trade during the past two weeks was a zero-sum game. SET investors might have overreacted to the U.S. Presidential election results early Wednesday morning in New York, as the index plunged 1.58% to an intra-day low of 1,486.32 before bouncing back. It was the market consensus that a Trump win could ignite trade restrictions between the U.S. and emerging markets, which would hurt their economies.
The SET rally fizzled on Thursday and failed to break out the key technical resistance at the 1,513 level, as the Thai baht continued to weaken against the U.S. dollar. For the week, the
USD/THB exchange rate surged 1.29%, to close on Friday at 35.39 baht per dollar, following the rise in the U.S. Dollar index
(DXY), practically the USD/EUR exchange rate, which has gained 2.02% during the same period.
The yield of Thailand 10-year government bonds skyrocketed 10.05% for the week, to close at 2.41% on Friday. The yield spread between the Thailand 10-year bond and the benchmark U.S. 10-year Treasury Note, yielding at 2.138% on Friday, narrowed to 0.272 percentage points. Foreign investor selling continues, as net sells by foreign investors has already surged to 15.1 billion baht month-to-date, compared to net sells of 18.07 billion baht during the entire month of October.
The widely traded Airports of Thailand PCL (SET:AOT) stock gained 0.59% for the week, to 369.00 baht per share on Friday, as investors might be looking for bottom fishing. Shares of PTT PCL
(SET:PTT) and PTT Exploration and Production PCL (SET:PTTEP) were down 0.59% and 2.12%, respectively, for the week, along with crude oil prices. PTT PCL posted its third-quarter 2016 revenues of 435.17 billion baht on Friday, down 13.84% year-on-year, missing analysts’ expectations of 457.90 billion
baht.
The WTI crude price lost another 1.50% this week, to close at $43.41 per barrel on Friday, while the Brent crude spot price tanked 2.33% to close at $44.51 per barrel, after the EIA report showed U.S. weekly oil inventory continues to build, while the U.S. oil production ramped up sharply. Crude prices plunged almost 3% on Friday after Reuters reported that The Organization of the Petroleum Exporting Countries (OPEC) increased its output to 33.64 million barrels per day (bpd) in October, up 240,000 bpd from previous month.
The WTI crude oil futures (CLZ6) tanked 4.25% to a session low of $43.07 per barrel in electronic trading early Wednesday morning in New York, after the election results pointed to a Trump victory. In fact, Trump’s America First Energy Plan could be bearish for crude prices since it calls for American energy dominance, total independence from OPEC, revenues from energy production to rebuild roads, schools, bridges and public infrastructure, and cheaper energy for American agriculture, which could boil down to one thing — increased U.S. crude oil production.
The EIA weekly U.S. oil inventory report on Wednesday showed that domestic crude supplies increased by 2.4 million barrels to 485.0 million barrels, excluding the Strategic Petroleum Reserve, in the week ending November 4, compared to S&P Global Platts analysts’ expectations for a rise of 1.6 million barrels. The American Petroleum Institute (API) inventory data on Tuesday showed a U.S. crude inventory increase of 4.4 million barrels.
Separately, the EIA said the weekly U.S. crude oil production jumped by 170,000 bpd for the week ending November 4, to 8.692 million bpd. Weekly U.S. crude oil output has fallen about 9.55% from the peak level of 9.61 million bpd during the week ending June 5, 2015. Houston-based oilfield services company Baker Hughes Inc. said on Friday that the U.S. oil rig count rose by 2 to 452, compared to 316, when the rig count hit the low on June 6, 2016.
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