The Fed and the Ukraine drive Asian stock markets down

Investors monitor stock price movements at the headquarters of Asia Plus Securities on Sathon Road, Bangkok. (Photo: Pornprom Satrabhaya)

Recap: Most Asian equity markets extended losses on Friday as sentiment suffered on concerns over a planned interest rate hike by the US Federal Reserve next week and the breakdown of talks to put an end to the Russian assault on Ukraine.

Trade has been 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 0.82% from the previous week, with an average daily turnover of 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 sold 328.59 million baht worth of shares.

Journalists: An oil-related inflationary 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 soaring prices adding unwanted complexity to monetary fixation plans.

  • Consumer prices in the United States in February hit a new 40-year high of 7.9% year-on-year due to rising fuel, food and housing costs.
  • Gasoline prices in the United States, averaging $4.17 per gallon (equivalent to 36 baht per litre), have risen 21% over the past month. US Energy Secretary Jennifer Granholm on Wednesday called on oil companies to increase production and offset soaring prices at the pump.
  • Goldman Sachs on Thursday became the first major Wall Street bank to announce it would leave Russia after Moscow invaded Ukraine, followed quickly by JPMorgan Chase, while Citigroup announced it would limit its operations.
  • The European Central Bank will accelerate the withdrawal of monetary stimulus and has left the door open for an interest rate hike before the end of the year, with soaring inflation outweighing worries about the fallout from the the Ukrainian crisis.
  • The Chinese government has set its lowest economic growth target in more than 30 years at 5.5%, a sign that the housing crisis, tight Covid controls and global risks will continue to dampen demand.
  • Malaysian oil subsidies could more than double to 28 billion ringgit ($6.7 billion) this year if crude oil prices remain at high levels, the finance minister said on Thursday.
  • Cathay Pacific recorded a loss of just over $703 million last year, an improvement from the record loss of $2.7 billion suffered in 2020 as strict 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 stock buyback in a bid to boost its falling stock price.
  • Bitcoin fell back below $40,000, erasing gains sparked by earlier optimism over US President Joe Biden’s executive order on cryptocurrencies as investors concluded the executive order did not remove potential regulatory risk.
  • According to the University of the Thai Chamber of Commerce.
  • The Commerce Ministry expects headline inflation in March to remain elevated, driven by higher energy prices, after consumer prices jumped 5.3% year-on-year in February.
  • Manufacturers will struggle to hold down prices for their goods for another 3-6 months due to Ukraine crisis, but insist government continues to cap diesel prices below 30 baht per litre, says Federation of Thai Industries (FTI).
  • Japan plans to provide a subsidized loan of $500 million (16.6 billion baht) to Thailand to ease the impact of the pandemic, said Patricia Mongkhonvanit, director general of the Office of Public Debt Management.
  • The country’s industrial sentiment fell in February for the first time in six months, shaken by a spike in Covid infections, soaring oil prices and the impact of Russia’s invasion of Ukraine.
  • Consumer confidence fell for the second straight month in February, hitting its lowest level in five months.
  • The National Energy Policy Committee decided to lift borrowing limits from the State Petroleum Fund to allow for management flexibility and approved guidelines to deal with soaring fuel prices.
  • The Airlines Association of Thailand (AAT) is urging the government to let them add a fuel surcharge to tickets for domestic flights, as the Russian-Ukrainian conflict continues to drive up oil prices.
  • The Tourism Authority of Thailand (TAT) is preparing a plan to ease travel rules in line with the timeline to declare Covid-19 an endemic disease on July 1. The easing could include the end of the cumbersome Test & Go entry scheme if approved by the national Covid task force.
  • More than 7,000 Russian and Ukrainian tourists in Thailand are allowed to extend their visas without application fees.
  • 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 due to the spread of Covid-19.
  • Some 63% of hotels recorded losses as the average occupancy rate remained below 30% despite the renewal of the Test & Go program, according to a hotel operator sentiment index for February.
  • The cabinet agreed on Tuesday to provide tax relief for investments in digital assets in a bid to promote the digital economy.
  • The growing impact of the Russian-Ukrainian war is prompting Siam Cement Group (SCG), Thailand’s largest SET-listed industrial conglomerate, to revise its investment plan this year as energy and material prices raw increase.
  • Mitsubishi Motors (Thailand), Thailand Post and PTT Oil and Retail Business Plc (OR) have signed a memorandum of understanding to study battery electric vehicles (BEVs) for parcel delivery.

Future : Australia will release fourth quarter house prices, China will release February fixed asset investment and industrial production and Britain will release January jobs data on Tuesday. Due on the same day are Germany’s Economic Sentiment and US Producer Prices.

  • New Zealand will release fourth quarter current account data on Wednesday. The United States will release core retail sales and export and import prices for February. Canada will release February inflation.
  • The US Federal Reserve will announce its interest rate decision early Thursday Thailand time. Also on Thursday is a Bank of England rate decision and Australian jobs data. New Zealand will release its fourth-quarter GDP on Friday, Canada will release its January Core Retail Sales and the United States will release its February Existing Home Sales.

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

Asia Plus Securities recommends stocks that should benefit from lower energy prices, including GPSC and BJC, and stocks that will benefit from higher interest rates, including SCB and KBANK.

Technical view: DBS Vickers sees support at 1610 and resistance at 1670. Thanachart Securities sees support at 1632 and resistance at 1672.