Stocks recover after Fed calms inflation jitters

Stocks recover after Fed calms inflation jitters

Recap: Global and emerging markets gained on Friday after the Federal Reserve confirmed it would not raise interest rates until it sees inflation above its target for a certain time. Shares had slumped earlier on fears of tightening monetary policy after the US in April recorded its highest growth in inflation in nearly 12 years.

The SET index moved in a wide range of 1,501.02 and 1,596.8 points this week before closing yesterday at 1,549.48, down 2.24% from the previous week, in heavy daily turnover averaging 114.49 billion baht.

Retail investors were net buyers of 24.22 billion baht. Foreign investors were net sellers of 13.23 billion, institutional investors sold 8.57 billion and brokerage firms offloaded 2.42 billion baht worth of shares.

Newsmakers: Covid cases are declining quickly while vaccinations continue to rise slowly but surely in the United States. The Centers for Disease Control declared people who are fully vaccinated no longer need to wear masks, a move considered a watershed moment in the pandemic.

  • The UK reported on Thursday that 35.9 million people, equivalent to 68.2% of the adult population, had received at least one dose of coronavirus vaccine.
  • Fuel supply constraints along the US East Coast should ease in the coming days, Energy Secretary Jennifer Granholm said on Thursday, a day after Colonial Pipeline restarted its key pipeline, which had been shut for over a week because of a cyberattack.
  • The Covid vaccine maker BioNTech this week announced plans to build a Southeast Asian headquarters and manufacturing site in Singapore to produce hundreds of millions of mRNA-based vaccines per year.
  • There is a "high chance" the long-awaited air travel bubble between Singapore and Hong Kong will be delayed yet again from May 26 due to increasing virus cases in Singapore, a top Hong Kong official told the South China Morning Post yesterday.
  • The Philippine and Malaysian economies continued contracting in the first quarter, by 4.2% and 0.5% respectively, adding to signs that Southeast Asian nations are struggling amid a resurgence in coronavirus cases.
  • Wall Street stocks rallied on Thursday after Fed officials reiterated that price pressures from the reopening of the economy would prove transitory. Stocks had shed 2% on Wednesday after data showed annualised US inflation in April topped 4%.
  • Stocks linked to cryptocurrencies fell in line with a slump in Bitcoin, after Tesla CEO Elon Musk expressed concerns over the massive energy usage of crypto mining. Bitcoin plunged as much as 15% after Musk said he was worried over the "rapidly increasing use of fossil fuels for Bitcoin mining and transactions".
  • Gold prices slipped to a one-week low of $1,811 an ounce on Thursday, weighed down by a stronger dollar after a sharp rise in US consumer prices boosted expectations of an interest-rate hike.
  • The Sinovac vaccine is wiping out Covid among health workers in Indonesia, an encouraging sign for the dozens of developing countries reliant on the Chinese shot. A study of 128,000 Jakarta health workers released Wednesday found CoronaVac far more protective than earlier clinical trials had indicated.
  • Shares of Thai Airways International closed up 15% yesterday ahead of its last trading day on Monday, amid a possible delisting from the SET. Trading in THAI will be suspended from Tuesday, with a non-compliance (NC) sign applied until the company can eliminate grounds for delisting.
  • The Finance Ministry will not help recapitalise financially troubled Thai Airways, of which it is the biggest shareholder, says the State Enterprise Policy Office. A creditors' meeting scheduled earlier this week to approve the carrier's debt rehabilitation plan has been rescheduled for May 19.
  • The cabinet on Tuesday approved 45 billion baht worth of projects aimed at reviving the economy, as the country struggles with a third wave of coronavirus infections.
  • State agencies have been instructed to halt development proposals that were to be funded by the 1-trillion-baht emergency loan as the government is reserving the remainder to deal with the impact pf the new Covid surge.
  • Business sentiment plunged to a 39-month low, reflecting concerns about the severity of the new Covid outbreak, lower purchasing power, rising unemployment and public debt.
  • The Federation of Thai Industries (FTI) is worried about the effect of the new Covid wave on small and medium enterprises (SMEs) despite attempts led by the Bank of Thailand to help them gain better access to soft loans.
  • The Thai Chamber of Commerce (TCC) has discussed with the Bank of Thailand the possibility of SMEs being allowed to place purchase orders or invoices as loan collateral, making it easier for them to access funds to alleviate tight liquidity.
  • The Government Savings Bank (GSB) has focused on providing loans to people without a record in the National Credit Bureau system or with bad credit over the last year to help those affected by the pandemic to deal with unprecedented economic hardship.
  • The Tourism Authority of Thailand (TAT) has downgraded its outlook for domestic trips and tourism receipts this year because of the economic downturn caused by the third Covid wave.
  • The country is planning to waive mandatory quarantine for vaccinated visitors to Bangkok and top tourist destinations from October, deputy government spokeswoman Traisuree Traisoranakul said.
  • Phuket hopes to welcome 129,000 international tourists in the first three months of the quarantine-free programme starting on July 1, while the government will team up with airlines to subsidise 100,000 one-way domestic air tickets to revive travel, says the Tourism Authority of Thailand (TAT).
  • Tourism operators in Krabi are urging the government to procure enough vaccines and establish clear regulations for national parks in preparation for the area to open on Oct 1.
  • The National New Generation Vehicle Committee has approved investment privileges for electric vehicle (EV) charging and battery swapping businesses under its plan to develop more EV infrastructure in Thailand.
  • Fees for recently launched cross-border fund transfers between Thailand and Singapore through the PromptPay and PayNow systems may be lowered in the future if the transaction volumes are high, says the Bank of Thailand.
  • Central Pattana (CPN) began the official operation of a Covid vaccination centre on Thursday at Central Ladprao as part of its initiative to offer over 17,500 square metres of leasable areas at eight Central shopping centres as vaccination sites.
  • Coming up: Thailand will release first-quarter GDP data on Monday, and China will release April industrial production. Japan will announce first-quarter GDP data on Tuesday, Australia will release Reserve Bank of Australia meeting minutes, and the US will release April building permits.
  • The euro zone and Canada will release April inflation data on Wednesday. Due Thursday are April trade data from Japan, Australian employment figures for April, and German producer prices.
  • Thailand will release April trade data on Friday and China will release April core inflation. The same day, the euro zone and Germany will release May manufacturing and services PMI and the US will release April existing home sales.

Stocks to watch: LH Securities recommends investment in BDMS, CHG, TISCO and TOP. BDMS and CHG are expected to see excellent growth in profits in the second quarter thanks to surges in general patients as well as treatment of Covid patients. TISCO's first-quarter profits rose 19% year-on-year and 8% quarter-on-quarter, beating analysts' expectations, thanks to growth in its capital market business and good profits from investments. TOP gained from strong aromatics and base lubricants businesses, as well as oil stocks.

  • Asia Plus Securities recommends firms posting good first-quarter profits including SAT and TMT, as well as stocks with prospects for year-on-year from now on, such as BDMS.

Technical view: Krungthai Zmico Securities sees support at 1,525 points and resistance at 1,570. DBS Vickers Securities sees support at 1,525 and resistance at 1,573.

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