Asian shares advance on rate-cut optimism

RECAP: Asian stocks revived as central banks in the euro zone and Canada began their rate easing cycles this week, adding to expectations that the US Federal Reserve could soon follow suit.

The SET index moved in a range of 1,325.71 and 1,354.74 points this week, before closing on Friday at 1,332.74, down 1% from the previous week, with daily turnover averaging 41.84 billion baht.

Retail investors were net buyers of 3.53 billion baht, followed by institutional investors at 1.83 billion and brokerage firms at 183.25 million. Foreign investors were net sellers of 5.5 billion baht.

NEWSMAKERS: The European Central Bank on Thursday confirmed a widely expected interest rate cut of 25 basis points to 3.75%, down from a record 4% where it has been since September 2019. But President Christine Lagarde said lingering inflationary pressure in the 20-nation euro zone meant the path ahead was still unclear.

• Manufacturing activity in the US contracted at an accelerating pace in May, with the purchasing managers' index (PMI) dropping to 48.7 from 49.2 in April. But services PMI recovered to 53.8 from 49.4, beating market expectations.
• US businesses added 152,000 new jobs in May to mark the smallest increase this year, the payments company ADP said, in what appears to be another sign of a broader slowdown in hiring. Another survey showed US job openings in April fell to their lowest in over 3 years. This raises market hopes that the Federal Reserve will cut interest rates at its September meeting.
• The Bank of Canada cut interest rates by 25 basis points to 4.75% on Wednesday, the first rate cut in four years, as inflation slows. It signalled further cuts if inflation continues to decelerate.
• China's exports climbed more than expected in May, boosting hopes that the world's second-biggest economy can maintain its momentum even in the face of new tariff threats. Exports rose 7.6% in dollar terms from a year earlier, while imports increased 1.8%.
• Trading in shares of about 40 stocks on the New York Stock Exchange was halted on Monday after a technical glitch led to misquoted prices, including those of Berkshire Hathaway, which showed a drop of 99%. The error was quickly fixed and the erroneous trades cancelled.
• A $12-billion share sale by the oil giant Saudi Aramco sold out shortly after it opened on Sunday, in a boon to a government seeking funds to help pay for a massive economic transformation to reduce reliance on oil.
• Nvidia's market value surged past $3 trillion on Wednesday, lifting the chip giant ahead of Apple to become the second most valuable publicly listed company in the world. The price rose more than 5% on Wednesday to $1,224 before retreating on profit-taking on Thursday.
• The Opec+ alliance agreed to extend aggregate oil production cuts of 3.66 million barrels per day (bpd) until the end of 2025 to support oil prices amid sluggish demand and high interest rates. Another production cut totalling 2.2 million bpd will be extended until the end of September.
• Japanese household spending rose for the first time in 14 months in April, rising 0.5% from a year earlier. The Bank of Japan said its 2% inflation target might not be met next year if consumption remains sluggish. It also emphasised uncertainty about the timing of another interest-rate hike.
• Honda Motor launched production of a new fuel cell electric vehicle (FCEV) at its plant in Ohio. The CR-V e:FCEV is the first vehicle of its kind to combine an all-new US-made fuel cell system with plug-in EV charging capability.
• A consortium of Japanese businesses led by NTT Docomo has committed to invest $100 million in Aalto Haps, which manufactures and operates the stratospheric, solar-powered Zephyr High Altitude Platform Station. The service is expected to launch globally in 2026.
• The Vietnamese conglomerate Vingroup is selling off its cash-cow retail business and planning a stock market listing to raise funds for its loss-making EV business, rising concerns about future cashflow.
• Thailand's consumer price index rose to a 13-month high of 1.54% in May from a year earlier, after a rise of 0.2% in April, the Ministry of Commerce said on Friday.
• The Securities and Exchange Commission has approved the country's first spot Bitcoin exchange-traded fund, for One Asset Management and MFC Asset Management for sale to ultra-high net worth and institutional investors.
• The Energy Policy and Planning Office will propose a new national Power Development Plan to the cabinet in September, aiming to keep average electricity tariffs below 4 baht per unit throughout the plan period.
• The Joint Standing Committee on Commerce, Industry and Banking forecasts Thailand's GDP growth in 2024 will remain weak, at between 2.2% and 2.7%, due to various risk factors.
• The Ministry of Finance denied reports that digital wallet money would be distributed to 15 welfare cardholders before other groups. It said the plan was still to give the 10,000-baht handout to 50 million people in the final quarter of the year.
• The most realistic scenario for Thai tourism revenue this year is 3 trillion baht, missing the government's goal of 3.5 trillion, as many target markets have been hit by an economic downturn, the Tourism Authority of Thailand (TAT) said this week.
• Corporate bond issuance in the first five months of 2024 fell 35% year-on-year to 361 billion baht compared due to high interest rates, said the Thai Bond Market Association. It is currently monitoring 540 billion baht in bonds maturing in the second half.
• The Stock Exchange of Thailand plans to impose CF (caution-free float) signs on 17 listed companies that cannot meet free-float requirements. The CF sign indicates the companies have less free float or minor shareholders than the specified criteria, which may affect trading liquidity of stock trading.

COMING UP: China will release monthly consumer and producer prices on Tuesday. On Wednesday, the UK will report GDP, manufacturing and trade data, while Germany and the US will release May inflation figures. The Fed will discuss its interest rate decision at 2am Thursday Thailand time.

• On Thursday, the US will report initial jobless claims and producer prices, while the Bank of Japan will announce its interest rate decision. Friday brings Russian GDP and inflation, the US export price index and Japanese industrial production data.
• Locally, the Bank of Thailand will hold a rate meeting on Wednesday, and the Constitutional Court will hold a hearing on whether to dissolve the Move Forward Party.

STOCKS TO WATCH: Bualuang Securities recommends sectors that rely on consumer product demand, such as grocery and retail. Even though growth is slowing, consumer products have continued to expand 1.4% year-on-year on average and grew 2.8% in April, outperforming other groups. Top picks are CPALL, CPAXT, CRC and DOHOME.

• InnovestX Securities recommends stocks whose Q2 profits are expected to rise, while valuations are attractive and players have been able to outshine the market year-on-year. They include ADVANC, MINT, TU, BTG and OSP. Other firms with a good Q2 outlook, attractive valuations and regular dividends are AMATA, AU, KLINIQ, TPAC and TNP.

TECHNICAL VIEW: InnovestX Securities sees support at 1,310 points and resistance at 1,345. UOB Kay Hian Securities (Thailand) sees support at 1,300 and resistance at 1,355.