Fed allays concerns over hike
Global stocks, world gold and crude oil prices rallied after the Federal Reserve (Fed) chairman Jerome Powell reassured investors in his Jackson Hole speech that interest rate hikes aren't imminent although the tapering of the central bank's asset purchases will likely start within this year.
SCB Securities said US stock markets surged to fresh highs following the Fed chairman's statement as he clearly reiterated that the Fed's tapering of its bond purchases doesn't imply that interest rate hikes are looming as the central bank believes the US economy still needs time to fully recover and hit full employment.
As for the Thai bourse, apart from external positive sentiment, another supporting factor is the domestic easing of lockdown restrictions which is now boosting market sentiment.
The easing will take effect from tomorrow and is expected to help reinvigorate local economic activities and allow businesses to resume operations.
After the lockdown's easing, market strategists expect foreign funds will continue to flow into both the Thai stock and bond market in the short term.
The SET Index rose 1.4 % to close at 1,633.77 points on Monday with trading worth 117.4 billion baht.
The relaxing of inter-provincial travel has brought positive sentiment to tourism stocks such as Bangkok Airways (BA), Asia Aviation (AAV) and Airports of Thailand (AOT) which rose 6.03%, 4.48% and 1.59%, respectively, from Friday.
Asia Plus Securities (ASPS) said even though worries over interest rates are allayed, concerns over the Delta variant worldwide still persist. Considering the variant's prospective impact on the global economy, ASPS has reduced the weight of foreign investment by 5% to 30%.
Meanwhile, the broker has reportedly increased its investment in Thai stocks by 5% to 30% thanks to recent declines in daily new infections and Thai stocks' relatively low prices compared to regional counterparts.
ASPS recommended investing in stocks with low volatility or a selective purchase of stocks with unique supporting factors. The broker recommended allocating 20% of assets to fixed income and 5% in the money market as the interest rate remains low.
Poon Panichpibool, a market strategist at Krung Thai Bank, said the baht as of Monday morning opened at 32.53 baht against the US dollar, the highest since July 7.
According to Mr Poon, the worsening Delta outbreak in the US may have a negative effect on the employment rate.
The looming threat from the highly contagious variant has caused the dollar to weaken 0.39% and the US 10-year government bond yields to fall to 1.3% on Friday.
Meanwhile, West Texas Intermediate crude oil rose near US$70 per barrel on Monday after Ida Hurricane hit Louisiana Sunday and caused oil production in the Gulf of Mexico to drop by over 1.7 million barrels per day.