FED RATE SIGNALS AND OIL PRICE RETREAT HIT STOCKS
Recap: Suggestions by some US Federal Reserve officials that an interest-rate increase in June was possible jolted stock markets, although weak US job numbers on Friday could change the Fed’s mind. The oil price retreat also hurt energy-heavy stock markets including the Thai bourse.
The SET index moved in a tight range of 1,384.77 and 1,409.92 points before closing at 1,390.70 on Wednesday in a holiday-shortened week, down 1% from the previous week, on moderate turnover averaging 33.23 billion baht a day. Retail investors were net buyers of 3.05 billion baht and brokers bought 315.39 million more than they sold. Local institutional investors were net sellers of 2.44 billion baht and foreign investors cashed out 929.7 million. Big movers: NEP was the top gainer, adding 18.4% to 0.58 baht. JWD was the top loser, sliding 37.6% to 12.30 baht. Leading in turnover were SUPER — also top in volume — dipping 12.5% to 1.61 baht; PTT, down 3.6% to 293 baht; and JAS, steady at 4.36 baht.
Newsmakers: Atlanta Fed president Dennis Lockhart called a June rate increase “a real option”, while San Francisco Fed chief John Williams said he would support such a move provided the US economy stayed on track. Both are non-voting members of the Federal Open Market Committee (FOMC). They made their comment before figures showed new jobs in April totalled just 160,000, against forecasts of 205,000.
US employers in April added the fewest workers in seven months and the jobless rate held steady at 5%. Industries that showed strong first-quarter job growth pulled back, with retailers cutting payrolls by the most in two years and construction companies adding the fewest positions since last June. The figures suggest firms are adjusting in light of economic growth that has slowed for three straight quarters.
US factory activity expanded at a more moderate pace in April due in part to a slowdown in new orders, but a rise in export orders to an 18-month high and signs of falling inventories offered hope. Another report showed construction spending rose to an 8½-year high in March.
Chinese factory activity weakened further in April, according to the private Caixin Purchasing Managers’ Index. Its reading fell to 49.4 from 50.2 in March, marking the 14th consecutive month of decline.
The Chinese and Japanese economies are expected to slow sharply over the next two years but Asian growth will remain strong as domestic demand takes up the slack from weak global trade, according to a new IMF report. It forecast growth in Asia at 5.3% this year and next, down from its previous forecast of 5.4%. China is tipped to expand 6.5%, in line with Beijing’s expectations but down from 6.9% last year.
Bank of Japan Governor Haruhiko Kuroda warned that the yen’s biggest rally since Abenomics began risks harming the economic recovery. He also reiterated that policymakers would not hesitate to expand monetary stimulus to achieve their 2% inflation target.
Australia’s central bank cut its benchmark interest rate to an all-time low of 1.75% last week, as it seeks to restrain a rising currency and stave off deflation.
Thailand’s economy probably grew by 2.8% or 2.9% in the first quarter, with tourism and government spending the key drivers, said Deputy Prime Minister Somkid Jatusripitak. The National Economic and Social Development Board will release official GDP figures on May 16.
Consumer confidence fell for a fourth month in April and hit a sevenmonth low as people were concerned about the slow economic recovery, widespread drought and low farm prices. The survey by the University of the Thai Chamber of Commerce showed the index at 72.7 in April, compared to 73.5 in March.
Thailand’s retail industry grew 2.6% in the first quarter, lower than the 3% projected by the Thai Retailers Association (TRA), because of weaker consumer purchasing power.
Bangkok Bank (BBL), the issuer of the bank guarantee for Thai TV Co, paid the broadcasting regulator the overdue second installment of auction fees and interest totalling 288.4 million baht on behalf of the cash-strapped digital TV operator. BBL asked the National Broadcasting and Telecommunications Commission (NBTC) to reconsider demanding the remaining amount that Thai TV owes now that its two licences have been revoked.
PTT Plc expects to start building the second unit of its liquefied natural gas (LNG) receiving terminal in 2018. The 36.8-billion-baht terminal would start operating in 2022 at a capacity of 5 million tonnes per year.
Tipco Asphalt Plc (TASCO) is aiming for higher revenue from the sale of 2.6 million tonnes of asphalt this year, up 13% from last year, after acquiring stakes in two subsidiaries of France’s Colas Group.
Airports of Thailand plans to upgrade the Hat Yai airport to ease overcrowding and prepare for future traffic growth. A two-stage expansion would quadruple annual passenger handling capacity to 10 million a year over the next 12 years. Coming up this week: Indonesia will release first-quarter GDP figures today, while the Philippines stages its presidential election.
China will report inflation and loan growth for April tomorrow.
The Bank of Thailand’s Monetary Policy Committee will meet on Wednesday, with no change expected in the 1.5% policy rate.
The Philippine central bank will meet on Thursday. Euro zone industrial production for March is due the same day.
Details of the semi-annual MSCI Index review will be released on Friday. The Bank of Korea meets the same day, while data releases include US retail sales and euro-zone firstquarter GDP. Stocks to watch: Thanachart Securities’ picks for May include CENTEL, BH, CPNRF, DIF, MAJOR and MINT. The broker also has buy recommendations on turnaround stocks including SGP and KTC.
DBS Vickers Securities (Thailand) recommends high-dividend stocks ADVANC, INTUCH, DCC, AP, LPN, QH, SNC, SPALI, MODERN, TCAP, TMT, BTSGIF, DIF, CPNRF and SPF. Technical view: Asia Wealth Securities tips support at 1,381 with resistance at 1,414 points. SCB Securities puts support at 1,380 and resistance at 1,410 points.