Fed and Ukraine keep Asian bourses on back foot

Recap: Most Asian stock markets extended losses on Friday as sentiment suffered on worries over an anticipated interest-rate increase by the US Federal Reserve next week, and the failure of talks to halt the Russian onslaught in Ukraine.

Trade was volatile all week on the SET, with the index moving in a wide range of 1,580.80 and 1,659.67 points. Shares staged a 10-point rally on Friday to close at 1,658.01, down by 0.82% from the previous week, in daily turnover averaging 114.29 billion baht.

Retail investors were net buyers of 5.83 billion baht and foreign investors bought 675.95 million baht. Brokerage firms were net sellers of 6.18 billion baht and institutional investors offloaded 328.59 million baht worth of shares.

Newsmakers: An oil-driven inflation shock triggered by the war in Ukraine is forcing Asian policymakers to rethink their assumptions for 2022, with the risks of weak growth coupled with surging prices adding unwanted complexity to monetary setting plans.

• US consumer prices in February rose to a fresh 40-year high of 7.9% year-on-year on rising fuel, food and housing costs.
• US gasoline prices, averaging $4.17 a gallon (equivalent to 36 baht a litre) are up 21% in the past month. US Energy Secretary Jennifer Granholm on Wednesday called for oil companies to increase production and offset the spike in pump prices.
• Goldman Sachs on Thursday became the first major Wall Street bank to say it will exit Russia following Moscow's invasion of Ukraine, followed swiftly by JPMorgan Chase, while Citigroup said it would limit operations.
• The European Central Bank will speed up the withdrawal of monetary stimulus, and has left the door open to an interest-rate hike before year-end, as soaring inflation outweighs concerns about the fallout from the Ukraine crisis.
• China's government set its lowest economic growth target in more than 30 years, at 5.5%, a sign the housing slump, stringent Covid controls and global risks will continue to curb demand.
• Malaysian petroleum subsidies could more than double to 28 billion ringgit (US$6.7 billion) this year if crude oil prices remain at elevated levels, the finance minister said on Thursday.
• Cathay Pacific posted a loss of just over US$703 million for last year, an improvement on the record loss of $2.7 billion suffered in 2020, as tough travel restrictions persist. The Hong Kong carrier's passenger capacity is still just 2% of pre-pandemic levels.
• Amazon.com is planning a 20-to-1 stock split, its first in more than two decades, and a huge share buyback in a bid to boost its sagging share price.
• Bitcoin dropped back below $40,000, erasing gains sparked by earlier optimism about US President Joe Biden's executive order on cryptocurrencies, as investors concluded that the order did not remove potential regulatory risk.
• The Russian invasion of Ukraine is expected to inflict 244.7 billion baht worth of damage to the Thai economy, dragging GDP growth down to only 2-3% this year, if it lasts for the entire year, according to the University of the Thai Chamber of Commerce.
• The Commerce Ministry expects headline inflation in March to remain high, driven by a rise in energy prices, after consumer prices jumped 5.3% year-on-year in February.
• Manufacturers will struggle to maintain their goods prices for another 3-6 months because of the Ukraine crisis, but they insist the government should continue to cap diesel prices at below 30 baht a litre, says the Federation of Thai Industries (FTI).
• Japan plans to provide a soft loan of US$500 million (16.6 billion baht) to Thailand to mitigate the impact of the pandemic, says Patricia Mongkhonvanit, director-general of the Public Debt Management Office.
• The country's industrial sentiment dropped in February for the first time in six months, dented by a spike in Covid infections, surging oil prices and the impact of Russia's invasion of Ukraine.
• Consumer sentiment dropped for the second straight month in February, hitting the lowest level in five months.
• The National Energy Policy Committee has resolved to lift borrowing limits of the state Oil Fund to allow for management flexibility and approved guidelines to address surging fuel prices.
• The Airlines Association of Thailand (AAT) is urging the government to let them add a fuel surcharge onto tickets for domestic flights, as the Russia-Ukraine conflict continues to push up oil prices.
• The Tourism Authority of Thailand (TAT) is preparing a plan to relax travel rules in line with the timeline to declare Covid-19 an endemic disease on July 1. The relaxation could include an end to the cumbersome Test & Go entry scheme if approved by the national Covid task force.
• More than 7,000 tourists from Russia and Ukraine in Thailand are being allowed to extend their visas without an application fee.
• The US Centers for Disease Control and Prevention has added Thailand, Hong Kong and New Zealand to the list of destinations Americans are advised to avoid because of the spread of Covid-19.
• Some 63% of hotels recorded losses as average occupancy lingered below 30% despite the renewed Test & Go scheme, according to an index of hotel business operator sentiment for February.
• The cabinet agreed to ease taxes on Tuesday for investments in digital assets in a move to promote the digital economy.
• The widening impact of the Russia-Ukraine war is causing SET-listed Siam Cement Group (SCG), Thailand's largest industrial conglomerate, to review its investment plan this year as energy and raw materials prices are increasing.
• Mitsubishi Motors (Thailand), Thailand Post and PTT Oil and Retail Business Plc (OR) have signed a memorandum of understanding to study battery-powered electric vehicles (BEVs) for parcel delivery.

Coming up: Australia will release fourth-quarter house prices, China will release February fixed-asset investment and industrial production and Britain will release January employment data on Tuesday. Due the same day are Germany economic sentiment and US producer prices.

• New Zealand will release fourth-quarter current account data on Wednesday. The US will release February core retail sales and export and import prices. Canada will release February inflation.
• The US Federal Reserve will announce its interest-rate decision early Thursday Thailand time. Also due Thursday is a Bank of England rate decision and Australian employment data. New Zealand will release fourth-quarter GDP on Friday, Canada will release January core retail sales and the US will release February existing home sales.

Stocks to watch: UOB Kay Hian Securities recommends accumulating stocks of companies expected to show profit growth for the rest this year, including SCC, PTTGC, BGRIM, GPSC, TASCO, AAV, EPG, SCGP and SFT. For electronics stocks, the brokerage recommends HANA and KCE. It also recommends speculative buying of energy stocks such as PTTEP, BANPU and TOP.

Asia Plus Securities recommends stocks expected to benefit from an energy price decline, including GPSC and BJC, and stocks that will benefit from higher interest rates, including SCB and KBANK.

Technical view: DBS Vickers sees support at 1,610 points and resistance at 1,670. Thanachart Securities sees support at 1,632 and resistance at 1,672.