Asian Markets Rally on Expectations of US Rate Cuts
Asian share markets experienced a positive trend on Friday, mirroring the performance of Wall Street. This surge was driven by expectations that the United States might implement up to three interest rate cuts by the end of the year. These potential reductions could lead to lower borrowing costs globally, offering relief to bond markets and putting downward pressure on the US dollar.
In Thailand, the SET index witnessed five consecutive days of gains, inching closer to the 1,300-point mark. This upward movement was fueled by optimism surrounding the economic policies of the incoming Bhumjaithai government and its promised stimulus measures. The index fluctuated between 1,264.79 and 1,299.19 points during the week, ultimately closing at 1,293.62, reflecting a 2.3% increase from the previous week. Daily trading volume averaged 46.56 billion baht, indicating strong market participation.
Institutional investors were net buyers of 1.19 billion baht, while retail investors contributed 254.03 million baht. On the other hand, foreign investors were net sellers of 1.34 billion baht, with brokerage firms also showing a net selling position of 107.15 million baht.
Global Economic Developments
President Donald Trump signed an executive order that paves the way for tariff exemptions for countries that reach agreements on industrial goods exports such as nickel, gold, and pharmaceuticals. Additionally, he proposed that the European Union join the US in pressuring countries like China and India to impose tariffs on Russian oil imports, aiming to increase pressure on Moscow to end the conflict in Ukraine.
The European Central Bank kept interest rates unchanged at 2%, aligning with market expectations despite ongoing economic uncertainties linked to Trump’s aggressive tariff agenda. In Germany, the number of business insolvencies rose by 12.2% in the first half of the year, underscoring the challenges faced by the government in reviving economic growth.
The US economy reported 911,000 fewer jobs created in the 12 months through March than previously estimated, suggesting that job growth had already begun to slow before the implementation of new import tariffs. Meanwhile, the US consumer price index (CPI) increased by 2.9% year-on-year in August, marking the highest level since January. Although this figure exceeds the Federal Reserve’s 2% target, concerns over labor market weakness may push the Fed toward rate cuts in the near future.
Market Trends and International Trade
Gold prices surged to an all-time high of $3,673.95 per ounce in late August, driven by anticipation of a US rate cut. Japan’s economy expanded at an annualized pace of 2.2% in the second quarter, surpassing the initial estimate of 1%. This growth is attributed to rising private consumption, marking five consecutive quarters of economic expansion.
China plans to nearly double its storage capacity for new energy sources to 180 gigawatts by 2027, which is expected to stimulate 250 billion yuan ($35 billion) in investment in solar, wind, and other clean energy sectors. Inflation in China remained below expectations at 0.4% year-on-year in August, while producer prices contracted as anticipated by 2.9%.
The US has raised import tariffs on PET plastic pellets to 27-28% from 6.5%, which is beneficial for companies with significant production bases in the US. However, China’s exports in August rose only 4.4% year-on-year, pressured by a 33% drop in exports to the US.
Technological and Corporate Developments
OpenAI, the developer of ChatGPT, has partnered with Oracle to build $300 billion worth of computer infrastructure to advance AI technologies. Oracle’s stock surged by 36% on Wednesday, marking its largest gain since 1992. Boeing reported 57 jet deliveries in August, the highest number of August deliveries since 2018, surpassing its full-year 2024 total.
Vietnam has approved a five-year pilot program for crypto asset trading, aiming to capitalize on a thriving but unregulated market. Meanwhile, Thai consumer confidence fell to a 32-month low in August, driven by concerns about economic recovery, political instability, and US tariffs.
Domestic Policy and Economic Outlook
Prime Minister Anutin Charnvirakul appointed Ekniti Nitithanprapas as deputy premier and finance minister, and Suphajee Suthumpun as commerce minister. The new finance minister is tasked with reviving the Khon La Khrueng co-payment consumption stimulus program, which could generate 50 billion baht in money circulation in the fourth quarter.
Incoming Deputy Finance Minister Vorapak Tanyawong suggested shifting gold trading settlements from baht to dollars to ease pressure on the local currency, which has reached a four-year high against the dollar. The Tourism Authority of Thailand proposed new tourism stimulus to counteract the impact of the strong baht on foreign arrivals.
Upcoming Economic Events
On Monday, the euro zone will release trade figures, and India will update its wholesale price index. Tuesday features US retail sales data and Japan’s trade reports. Wednesday brings US and Canadian interest rate decisions and euro zone inflation data. Thursday sees UK and Japan interest rate decisions, while Friday includes euro zone finance ministers’ meetings and UK retail sales data.
Locally, the Bank of Thailand will host the Bangkok Digital Finance Conference on Monday and Tuesday. On Tuesday, UOB Asset Management will discuss the fourth-quarter investment outlook.
Stocks to Watch
Daol Securities highlighted stocks that could benefit from the Tourism Authority of Thailand’s new “Half-Half Tour” promotion, including ERW, CENTEL, and MINT. Land and Houses Securities recommended CPALL, GULF, and MTC as fundamentally strong investments. InnovestX Securities flagged geopolitical tensions and US tariff uncertainties as potential contributors to market volatility, with top picks being MTC, CRC, and BCPG.
Technical Analysis
InnovestX Securities identified support at 1,255 points and resistance at 1,333. Krungsri Securities noted support at 1,276 and resistance at 1,309.
