US economic data and earnings cheer investors

US economic data and earnings cheer investors

Recap: Global shares approached record highs while the euro was on course for its biggest rise in nine months as the dollar weakened for a fourth consecutive week. Investor sentiment was buoyed by strong US economic data and corporate earnings and the Federal Reserve's reiteration of its commitment to the easy monetary policy. Asian markets turned lower yesterday following the release of below-forecast Chinese factory data.

The SET index moved in a range of 1,544.10 and 1,593.23 points this week before closing yesterday at 1,583.13, an increase of 1.9% from the previous week, in daily turnover averaging 90.02 billion baht.

Foreign investors were net buyers of 3.33 billion baht and brokerage firms bought 1.37 billion baht. Retail investors was net sellers of 3.83 billion baht while institutional investors offloaded 866.47 million baht worth of shares.

Newsmakers: US President Joe Biden on Wednesday announced a $2-trillion spending plan to help the middle class by expanding family leave and child care, healthcare, preschool and college education for millions. Higher taxes on corporations and on the wealthiest individuals will help pay for the programmes, he said.

  • Japan's parliament on Wednesday ratified the world's largest free trade deal, the 16-country Regional Comprehensive Economic Partnership (RCEP) that also includes China and the 10 Asean states. Once more members ratify the deal, it is expected to take effect later this year.
  • The European Parliament on Tuesday voted overwhelmingly to ratify the EU trade deal with Britain, turning the page on a difficult Brexit chapter but with little hope of smoothing relations with London.
  • Tesla reported a jump in first-quarter profits on Monday on surging electric vehicle sales, but it faces growing headaches in China, which accounts for one-third of its sales, over its handling of complaints about vehicle quality.
  • Google parent Alphabet reported that quarterly profit more than doubled as digital advertising surged with more people relying on the internet during the coronavirus pandemic.
  • Facebook shares rallied 7.3% to an all-time high on Wednesday after it reported forecast-beating quarterly revenue and profit.
  • Apple also reported a blowout quarter on Wednesday, with sales up 54% year-on-year. The iPhone maker said it expected more double-digit gains in the second quarter but cautioned that a chip shortage could affect some production.
  • Oil prices were on track yesterday for a weekly gain after topping $65 a barrel on Thursday for the first time since mid-March. Prospects for higher fuel consumption from the US, China and the UK have brightened the outlook, though the virus surge in India remains a threat to the recovery.
  • The digital token Ether is taking the cryptocurrency limelight from Bitcoin, which remains well below its mid-April peak. Strategists at JPMorgan Chase see "more resilient liquidity" in Ether, which reached a high of $2,717 on Wednesday. Over the past year, its 1,231% advance dwarfs the seven-fold rally of Bitcoin.
  • A record-high $41.8 billion was spent on cloud computing in the recently ended quarter as businesses leaned heavily on the internet to survive the pandemic, market tracker Canalys said on Thursday.
  • Amazon will increase pay between 50 cents to $3 an hour for more than half a million workers on its fulfillment, delivery and sorting teams, the US tech giant announced Wednesday.
  • The government on Thursday intensified Covid controls in the hardest-hit "dark red" provinces including Bangkok. Restaurants in dark-red zones will be takeout-only and must close at 9pm for the next two weeks. Working from home is strongly recommended. Mask wearing in public is now mandatory nationwide, and the quarantine period has been increased back to 14 days for all arrivals from abroad.
  • The Federation of Thai Industries says it will go ahead with its plan to import vaccines for companies that want to distribute them to employees, but the Thai Chamber of Commerce conceded it might be too late for the private sector to procure vaccine supplies amid intense global demand.
  • Prime Minister Prayut Chan-o-cha promised to work closely with the private sector to accelerate the Covid-19 vaccine rollout in the face of a public outcry over the slow pace of inoculations.
  • The cabinet on Tuesday gave Gen Prayut sweeping authority to do virtually anything he thinks is necessary to get a grip on the pandemic.
  • The government is preparing some 300 billion baht worth of new measures to help reduce people's expenses and stimulate domestic consumption as the new Covid wave hammers the economy again.
  • The Finance Ministry has cut its economic growth forecast again to 2.3% this year from earlier predictions in January of 2.8% and 4.5% in October, largely because of the impact of the pandemic on the battered tourism sector.
  • Japan Credit Rating Agency (JCR) remains upbeat on Thai economic prospects, expecting growth of around 3% in 2021 after a 6.1% contraction in 2020, while affirming the sovereign credit rating at A- with a stable outlook.
  • The government has halved its expected number of international visitors to 3-4 million this year as the new Covid wave delays reopening, and slashed its tourism revenue forecast.
  • Authorities in Phuket are seeking approval to purchase Covid vaccines so they can expedite the provincial jab drive in hopes of meeting the July 1 target for opening the resort island to vaccinated foreigners.
  • AstraZeneca said its plan to produce its Covid-19 vaccine in Thailand has made significant progress and the first batch of vaccines would be ready for delivery to the government by June as planned.
  • Average household debt of Thai workers has recorded a historic surge of almost 30% to around 205,000 baht compared with 2019, driven by the pandemic, says the University of the Thai Chamber of Commerce.
  • The Export-Import Bank of Thailand (Exim Thailand) has rolled out aid measures including soft loans and principal repayment suspensions for SMEs doing business in Cambodia, Laos, Myanmar and Vietnam.
  • The Thai Credit Guarantee Corporation (TCG) has introduced a credit guarantee scheme worth 250 billion baht for small and medium-sized enterprises.
  • The central banks of Thailand and Singapore have announced the world's first cross-border fund transfer service that requires only a recipient's mobile phone number if they are registered with PayNow in the city-state or PromptPay in Thailand.
  • Thailand's manufacturing production index (MPI) in March reached a 29-month high, increasing by 4.12% year-on-year to 107.73 points, an 8.39% rise from February.
  • Massive labour migration out of the capital during the first Covid wave last year may present an opportunity to modernise the agricultural sector and develop other regions of the country, according to a Bank of Thailand study.
  • PTT Plc and its petrochemical arm IRPC Plc have officially established Innopolymed Co as their first flagship firm to produce medical equipment.
  • Asia Aviation (AAV), the largest shareholder of Thai AirAsia (TAA), is preparing to restructure its business after securing 3.15 billion baht from a new local investor after being unable to obtain a soft loan from the government. The plan includes listing TAA and then dissolving AAV, the holding company for the airline.

Coming up: Germany, the euro zone, US and Canada will release April manufacturing PMI on Monday, followed by China on Tuesday. Also on Tuesday, Australia will announce an interest rate decision and March trade figures, along with the US and Canada. The US will also release March factory orders and Canada will release March building permits.

The Bank of Thailand will announce the results of its policy meeting on Wednesday, and the government will release April inflation data. New Zealand will release first-quarter employment figures, the US will release April nonfarm employment and non-manufacturing PMI, and the euro zone will release April composite PMI.

Germany will release March factory and April construction updates on Thursday, the euro zone will release March retail sales, and Japan and China will release April service PMI. China and Germany will release April trade figures on Friday, and the US will release April unemployment and nonfarm payrolls.

Stocks to watch: SCB Securities recommends defensive stocks that are less affected by the third Covid wave, such as GLOBAL, HMPRO, ADVANC, EA, KCE, GULF and BGRIM. Stocks expected to report good first-quarter results are STARK, TWPC, TNP, WICE, NER and SFT.

DBS Vickers Securities recommends fundamental stocks with potential for growth in the second quarter including KBANK, PTT, PTTEP, BCH, SCC, SCGP, STGT, TQM, UTP and SPALI.

Technical view: DBS Vickers sees support at 1,550 points and resistance at 1,610. Finansia Syrus Securities sees support at 1,560 and resistance at 1,600.

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