Asian shares inch up on hope for US 'soft landing'

RECAP: Asian shares inched higher yesterday, while the dollar retreated from a one-month peak, as investors assessed US economic data suggesting that a hoped-for "soft landing" is possible.

The Thai stock market was little changed as investors await clarity in domestic politics and second-quarter earnings reports, both at home and abroad.

Thai shares moved in a range of 1,528.63 and 1,562.07 points this week before closing yesterday at 1,530.46, down 0.8% from the previous week, in daily turnover averaging 49.35 billion baht.

Retail investors were net buyers of 5.7 billion baht, followed by brokers at 833.55 million. Foreign investors were net sellers of 5.21 billion baht, followed by institutions at 1.32 billion.

NEWSMAKERS: Investors said the downgrade of US debt by Fitch Ratings to AA+ from AAA is unlikely to harm the top-notch status of US assets, citing a lack of alternatives and the economy's solid growth. Fitch cited concerns about the US debt burden and political dramas over the debt ceiling.

• The US 10-year government bond yield spiked to 4.19%, a nine-month high, after Fitch downgraded its US credit rating.
• Apple said its revenue fell for a third straight quarter as a gloomy macroeconomic outlook weakens global consumer demand. For the three months ended July 1, sales dipped 1.4% year-on-year to $81.8 billion with its main revenue driver, the iPhone, falling 2.5% to $39.7 billion.
• Amazon.com sales rose 11% year-on-year to $134.4 billion, topping Wall Street estimates. The e-commerce giant reported net profit of $6.7 billion for the quarter compared with a net loss of $2 billion the year before.
• Second-quarter GDP in the euro zone exceeded expectations, with 0.6% growth year-on-year. July inflation eased to 5.3% from 5.5% in June.
• The Bank of England raised its interest rate by another 25 basis points to a 15-year high of 5.25% and signalled that rates would stay high until inflation, now 7.9%, returns to the target of 2%.
• The price of benchmark Brent crude oil rose 2.6% to top $84 a barrel after Saudi Arabia said it would continue its output cuts of 1 million barrels per day through the end of September, while Russia is cutting exports by 300,000 bpd to support prices.
• US crude oil inventories decreased by a record 17 million barrels in the week to July 29, giving a lift to oil prices. Washington also cancelled the purchase of 6 million barrels of crude to fill its strategic reserve on expectations that prices will continue to rise.
• US factory activity contracted in July for a ninth straight month, reflecting tepid demand for American goods at home and abroad. The manufacturing purchasing managers' index (PMI) of 46.4 was well below the 50 the separates contraction from expansion. The services PMI declined to 52.7 from 53.9.
• Toyota Motor reported a record operating profit of ¥1.1 trillion ($7.7 billion) for the April-June quarter, up 93.7% from the same period the previous year, as easing chip shortages and efforts to improve productivity boosted auto sales worldwide.
• Mitsubishi UFJ Financial Group (MUFG) plans to invest $936 million in US Bancorp in a move that will help the US regional bank pay back some of the debts it owes the Japanese lender. MUFG's stake in the fifth-largest US bank will rise to 4.4% from 2.9%.
• Kawasaki Heavy Industries' aerospace business is expected to outearn its motorcycle business by the fiscal year ending in March 2025 as demand increases from key clients like Boeing, the Japanese company said as it reported ¥98 billion ($684 million) in profit for the year ended March 31.
• The Japanese electronic parts maker Murata Manufacturing is investing ¥11.2 billion ($78 million) to expand a plant in the Philippines to boost production of ceramic capacitors to tap demand tied to EVs and 6G communications technology.
• Walmart has paid $1.4 billion to buy out the investment of the hedge fund Tiger Global in the Indian e-commerce firm Flipkart. The transaction will value the firm at $35 billion.
• The Hong Kong Stock Exchange has removed a requirement for companies to spell out China-related risks in their applications to list in the territory.
• HashKey Exchange and OSL have become the first cryptocurrency exchanges in Hong Kong to secure licences for retail investors to trade as the city continues its campaign to become a crypto hub.
• The Chinese government has announced incentives to stimulate tourism, purchases of EVs and smart appliances, while VAT cuts for for small and family businesses will remain until 2027.
• Yum China, the country's biggest fast-food operator, reported record second-quarter profit of $257 million, helped by heavy promotions to boost sales. The operator of 13,600 outlets of KFC, Pizza Hut, Taco Bell and others said revenue rose 34% to $2.51 billion.
• The Bank of Thailand on Wednesday raised its policy rate for the seventh consecutive meeting by 25 basis points to 2.25%, the highest in more than nine years. Inflation is near zero but the central bank said it expects prices to rise in the near term.
• Attempts to form a new government hit another delay as the Constitutional Court postponed until Aug 16 a ruling on parliament's rejection of a second attempt to nominate Move Forward Party leader Pita Limjaroenrat for prime minister. The Pheu Thai Party is now attempting to cobble together a new coalition without Move Forward.
• Rice exporters in Thailand and Vietnam are renegotiating prices on sales contracts for around half a million tonnes for August shipment, as India's ban has tightened global supplies. Thai 5% broken rice, an Asian benchmark, has climbed to $625 a tonne, from $545 two weeks ago.
• Energy Absolute, the country's top renewable power operator, is in talks with EVE Energy, China's third-largest lithium-ion battery producer, to build a new factory in Thailand.
• The beleaguered Ashton Asoke luxury condominium will not be demolished for failing to provide adequate access, but its developer must reapply for a construction permit within 30 days with a plan to remedy the legal shortcoming, said Bangkok governor Chadchart Sittipunt.
• The Tourism Authority of Thailand (TAT) is maintaining its target of 200 million domestic trips this year despite tepid consumption, with tourism revenue topping 1 trillion baht.
• Kasikornbank has set up Kasikorn Investure Co (KIV), a holding company offering financial services to individuals and small business entrepreneurs, with a focus on underserved customers who have difficulty accessing loans from banks.
• The Electricity Generating Authority of Thailand (Egat) says it will not lower electricity bills further as it intends to clear the debts it has run up from subsidising prices by April 2025, so that it can make necessary investments. Electricity costs for the September-December period will be 4.45 baht per unit, down from 4.70 baht now.
• The Joint Standing Committee on Commerce, Industry and Banking has kept its 2023 GDP growth target at 3% to 3.5%, with exports contracting by 2% (or zero growth in a best-case scenario) and inflation between 2.2% and 2.7%. The economy expanded 2.6% in 2022.
• Thailand's public debt to gross domestic product (GDP) ratio stood at 61.15% at the end of June, down from 61.63% in the previous month, Finance Ministry data showed.

COMING UP: On Tuesday, China will report July trade figures and the US will release June import and export data. releases such figures of June. On Wednesday, China will release consumer and producer prices for July, and the US will release July inflation and updated weekly jobless claims.

• Locally, the Ministry of Commerce will update trade and economic indices on Monday. On Thursday, the SET will report trading figures for July.

STOCKS TO WATCH: Asia Plus Securities expects the SET index in August will be driven by external factors as the cycle of rising interest rates is nearing an end. Concerns about a US recession have eased while China is ready to introduce additional stimulus measures.

• The brokerage recommends three investment themes, including China-play stocks such as ERW and SCGP; election plays, namely GPSC, CK and SIRI; and earnings momentum plays like PLANB and SNNP.
• Tisco Securities recommends firms expected to report good Q2 results with strong earnings momentum for the second half. Some will also pay interim dividends. Top picks are ADVANC, BEM, COM7, HANA, III, PLANB, SCB and SPA.

TECHNICAL VIEW: InnovestX Securities sees support at 1,510 points and resistance at 1,570. Tisco Securities sees support at 1,515 and resistance at 1,570.