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The SET index surged 1.78% for the week, to close on Friday at 1,590.80, after retesting the 1,600 level on Thursday for the first time since February 2015. The index was led by big cap stocks, including PTT PCL (SET:PTT) and Siam Cement PCL (SET:SCC), which skyrocketed 8.29% and 4.03%, respectively. Thai Airways International PCL (SET:THAI) was down 3.45%, as the bribery scandal saga at Britain’s Rolls-Royce, which also involves PTT PCL, continues.
The Bangkok Post reported on Friday that PTT will allow the National Anti-Corruption Commission (NACC) to examine the company's internal investigation into the Rolls-Royce bribery case. The market may consolidate sideways or pull back slightly, as a bearish ascending wedge chart pattern has emerged, while the RSI signals that it slightly overbought.
The USD/THB exchange rate was down 0.35% for the week, to close on Friday at 35.275 baht per dollar. The U.S. Dollar index (DXY), a measure of the U.S. dollar value relative to a basket of foreign currencies, closed at 100.53, down another 0.16% for the week, after the U.S. government said the U.S. fourth-quarter GDP 2016 was up just 1.9%, compared to expectations for 2.2% growth.
The yield of Thailand 10-year government bonds inched 1.29% higher for the week, to close at 2.745% on Friday. The yield spread between the Thailand 10-year bond and the benchmark U.S. 10-year Treasury Note, yielding at 2.486% on Friday, widened to 0.259 percentage points, the level not seen since May 2016.
The WTI crude spot price closed practically unchanged for the week at $53.17 per barrel on Friday, while the Brent crude spot price gained 0.2% for the week to close at $55.62 per barrel, despite that the EIA reported a larger-than-expected build in U.S. crude oil inventories and a continued increase in the oil rig count. According to CNBC, the Organization of the Petroleum Exporting Countries, or OPEC, said on Monday that it was near its target of cutting 1.8 million barrels per day, or bpd.
The WTI crude price surged almost 2.5% to an intraday high of $54.06 per barrel on Thursday, after Mexico’s President Enrique Peña Nieto told the White House that he canceled his meeting with President Trump that was scheduled for next week. In response, White House press secretary Sean Spicer told the media that the administration is considering a 20% tax on Mexican imports to help pay for the U.S.-Mexico border wall, according to Business Insider.
The Twitter brawl started when Mr. Trump sent out the tweet, “If Mexico is unwilling to pay for the badly needed wall, then it would be better to cancel the upcoming meeting.” Mr. Nieto tweeted back, "This morning we have informed the White House that I will not attend the meeting scheduled for next Tuesday with the POTUS.". Mexico’s President has said repeatedly that there is no way Mexico is going to pay for the wall.
Here is a take from Andurand Capital Management, a $1.6 billion London-based hedge fund firm, "If the tax is adopted, WTI could move to a $10 premium to Brent providing a substantial economic advantage to U.S. producers,"… "Such a tax would also increase domestic gasoline prices in the U.S.", according to Business Insider.
The EIA weekly U.S. oil inventory report on Wednesday showed that domestic crude supplies increased by another 2.8 million barrels to 488.3 million barrels, excluding the Strategic Petroleum Reserve, in the week ending January 20, compared to the S&P Global Platts forecast for a stockpile decline of 1.9 million barrels. The American Petroleum Institute (API) inventory data on Tuesday showed a U.S. crude inventory increase of 2.9 million barrels.
Separately, the EIA said the weekly U.S. crude oil production surged 17,000 bpd for the week ending January 20, to 8.961 million bpd. Weekly U.S. crude oil output has fallen about 6.75% 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 jumped another 15 to 566, compared to 316, when the rig count hit the low on June 6, 2016.
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