SET Index Ended The First-Quarter 2017 With A Negative Note

Witawat (Ed) Wijaranakula, Ph.D.
Fri Mar 31, 2017

Related Ticker: iShares MSCI Thailand Capped ETF (NYSEARCA:THD)

The SET index inched up 0.1% for the week, to close on Friday at 1,575.11, despite a pullback by big cap stocks, including PTT PCL (SET:PTT), Airports of Thailand PCL (SET:AOT), Kasikornbank PCL (SET:KBANK), down 5.15%, 1.26%, and 1.05%, respectively. The SET index was down 0.3% on Friday, the last trading day of the quarter, after the index surged at the opening but struggled at the upper trendline resistance of the symmetrical triangle chart pattern, and turned negative at the close, technically a bearish intraday reversal. According to the SET market data, retail investors were net sellers during the first-quarter 2017 while Thai institutional investors were net buyers.

The USD/THB lost another 0.58% for the week to close on Friday at 34.35. The Bank of Thailand, or BOT, decided on Wednesday to leave its policy rate unchanged at 1.50%, and raised their economic growth forecast for this year to 3.4% from the previous 3.2%. The BOT also upgraded its projection for exports to 2.2% from the previous flat forecast. The U.S. Dollar index (DXY), essentially the USD/EUR exchange rate, closed at 100.22 on Friday, up 0.78% for the week after the UK Government triggered Article 50 and a full force of Fed officials came out and gave speeches to support arguments of further rate hikes. Boston Fed President Eric Rosengren, a non-voting member of the FOMC, said in a speech on Wednesday to the Boston Economic Club that he wants a rate hike at every other meeting this year, meaning three more rate hikes, according to MarketWatch. 

The yield of Thailand 10-year government bonds tumbled 2.16% for the week, to close at 2.72% on Friday. The yield spread between the Thailand 10-year bond and the benchmark U.S. 10-year Treasury Note, yielding at 2.389% on Friday, narrowed to 0.331 percentage points. The spot gold price gained 0.22% for the week, to close at U.S. $1,251.20 per ounce on Friday, while the Japanese yen was practically unchanged against the U.S. dollar.

The WTI crude spot price surged 5.27% for the week, closing at $50.50 per barrel on Friday, while the Brent crude spot price jumped 4.89% for the week to close at $53.62 per barrel, despite a bearish EIA weekly report showing the crude oil inventory stood at another record level and U.S. production continued to rise. Traders ran up crude prices anyway after the EIA said that gasoline supplies dropped 3.7 million barrels, while distillate stockpiles fell 2.5 million barrels last week, compared to the S&P Global Platts survey forecast for a fall of 2.1 million barrels of gasoline and decline of 1.1 million barrels for distillates. 

Bloomberg reported, from unnamed sources in Libya on Wednesday, that Libya’s largest oil field, Sharara, mysteriously stopped producing. Separately, according to Reuters, a joint committee of ministers from OPEC and non-OPEC oil producers agreed to review whether a global pact to limit supplies should be extended by six months. Although the Bloomberg report was unsubstantiated, and the six-month extension of the output cut by OPEC and non-OPEC was just talk, traders were quick to cover their short positions, according to data from the U.S. Commodity Futures Trading Commission, or CFTC.

The EIA weekly U.S. oil inventory report on Wednesday showed that domestic crude supplies increased by 0.867 million barrels to an all-time high of 533.98 million barrels, excluding the Strategic Petroleum Reserve, in the week ending March 24, compared to the S&P Global Platts forecast for a stockpile increase of 0.3 million barrels. The American Petroleum Institute, or API, inventory data on Tuesday showed a U.S. crude inventory increase of 1.9 million barrels. 

Separately, the EIA said the weekly U.S. crude oil production increased 18,000 bpd for the week ending March 24, to 9.147 million bpd. U.S. crude oil output increased 121,000 bpd to an average of 9.118 million bpd in March, compared to a February average of 8.997 million bpd. Output has fallen about 5.02% from the peak level of 9.60 million bpd in June 2015. Houston-based oilfield services company Baker Hughes Inc. said on Friday that the U.S. oil rig count rose another 10 to 662, compared to 316, when the rig count hit the low on June 6, 2016.


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