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The SET index traded up 1.57% for the week, to close at 1,500.37 on Friday, just above the key psychological resistance at 1,500.00, as the Thai baht rebounded. The index is trading in a descending wedge chart pattern and needs to break out, or face a repeat performance of last year. The
USD/THB currency pair declined 0.59% for the week, to close at 35.13 baht per dollar on Friday, while the U.S. dollar index surged another 0.70%, to close at 98.686 on Friday, as Federal Reserve officials continued talking up a rate hike.
Federal Reserve Bank of New York President William Dudley said late Wednesday at New York City’s Lotos Club, that he expects the central bank will be able to raise interest rates before year-end if the data are on track to achieve maximum employment and 2% inflation. Ironically, the Federal Reserve Bank of New York came out on Friday and revised its third-quarter 2016 GDP forecast 10 basis points downward, to 2.2% from 2.3%, while trimming its fourth-quarter 2016 GDP forecast by 20 basis points, to 1.4% from 1.6% previously, citing mixed data in the housing sector and in regional surveys, or Fed Beige Book.
One should expect a continuation of market volatility, as a Bloomberg survey showed that the baht is expected to weaken to 35.40 baht per dollar by year-end, while the probability of a 25 basis point rate hike at the FOMC meeting on December 14 stands at 63.6%, based on the CME Group 30-day Fed Fund futures prices as of October 21.
The yield of Thailand 10-year government bonds tanked 4.04% for the week, to close at 2.14% on Friday. The yield spread between the Thailand 10-year bond and the benchmark U.S. 10-year Treasury Note, yielding at 1.736% on Friday, narrowed to 0.404 percentage points.
Shares of Airports of Thailand PCL (SET:AOT) tumbled 2.28% to 385.00 baht per share as the number of foreign arrivals at five main airports during October 13-19 was 397,452, down 10,561 from the previous week, according to data from the Department of Tourism of Thailand. Shares of Kasikornbank (SET:KBANK) took a 6.86% nosedive to 176.50 baht per share after the bank released its 2017 earnings forecast that disappointed investors and analysts. Nomura Securities slashed its price target for KBANK from 240 baht to 190 baht, citing the stock should be trading at a lower valuation.
Shares of PTT PCL (SET:PTT) were practically unchanged for the week, while shares of PTT Exploration and Production PCL (SET:PTTEP) were up 3.64%, even though crude oil prices were unchanged. The WTI crude price was up $0.10 to close at $50.85 per barrel on Friday, while the Brent crude spot price inched $0.08 lower to close at $52.00 per barrel, despite that Saudi Arabia’s oil minister Khalid al-Falih said, at the Oil & Money conference in London on Wednesday, non-OPEC producers, possible Russia and Azerbaijan, are ready to join an output cut.
The EIA weekly U.S. oil inventory report on Wednesday showed that domestic crude supplies dropped by 5.2 million barrels to 468.7 million barrels, excluding the Strategic Petroleum Reserve, in the week ending October 14, compared to S&P Global Platts analysts’ expectations for a rise of 2.5 million barrels. The American Petroleum Institute (API) inventory data on Tuesday showed a U.S. crude inventory decline of 3.8 million barrels.
Separately, the EIA said the weekly U.S. crude oil production increased by 14,000 barrels per day (bpd) for the week ending October 14, to 8.464 million bpd. Weekly U.S. crude oil output has fallen about 11.93% 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 11 to 443, compared to 316, when the rig count hit the low on June 6, 2016. |
