Gold price up amid mass purchases after drop in US consumer confidence index
The price of gold rose by THB50 in morning trade on Wednesday.
AGold Traders Association report at 9.29am said the buying price of a gold bar was THB27,700 per baht weight and selling price THB27,800, while gold ornaments cost THB27,197.04 and THB28,300, respectively.
At close on Tuesday, the buying price of a gold bar was THB27,650 per baht weight and selling price THB27,750, while gold ornaments cost THB27,151.56 and THB28,250, respectively.
The spot gold price on Wednesday morning was moving around US$1,812 (THB58,654) per ounce after Comex gold rose by $5.90 to $1,818.10 per ounce at close on Tuesday, due to mass purchases of the precious metal as a safe-haven asset after announcement that the US consumer confidence index in August dropped to its lowest level in six months. Meanwhile, the market is keeping an eye on the results of US non-farm payrolls on Friday that could signal a timeline to cut credit under the US Federal Reserve’s quantitative easing programme.
The Hong Kong gold price meanwhile dropped by HK$50 to $16,810 (THB69,933) per tael, the Chinese Gold and Silver Exchange Society reported.
SET up, but faces pressure from short term share sell-offs, overbought stocks
The Stock Exchange of Thailand (SET) Index rose by 5.63 points or 0.34 per cent to 1,644.38 on Wednesday morning.
Krungsri Securities expected the day’s index to rise to between 1,643 and 1,650 points before falling back.
It said the index gained positive sentiment from the US Federal Reserve signalling it would not rush to raise the interest rate, and the first day of lockdown easing in Thailand as domestic infections saw a reported decline.
“However, the index would be under pressure due to short term mass sell-offs of sharers and signs of overbought stocks,” Krungsri Securities said.
It advised investors to follow a key Opec+ meeting on increasing oil production capacity by 400,000 barrels per day.
It also recommended buying of the following companies’ shares as an investment strategy:
▪︎ AOT, KBank, BBL, CPN, CRC, HMPro, AAV, BA, Mint, Amata and WHA, which benefit from the country reopening.
▪︎ CKP, Banpu, GPSC, Gulf, BCPG, BCH and CHG, whose third-quarter profit is expected to rise.
The SET Index closed at 1,638.75 on Tuesday, up 4.98 points or 0.30 per cent. Transactions totalled THB117.90 billion with an index high of 1,643.76 and a low of 1,628.12 as the SET rose for the eighth successive day.
Baht likely to strengthen after lockdown easing, but could weaken if new wave hits: market strategist
The baht opened at 32.23 to the US dollar on Wednesday, unchanged from Tuesday’s closing rate.
The Thai currency is likely to move between 32.10 and 32.30 during the day, Krungthai Bank market strategist Poon Panichpibool said.
The baht was likely to strengthen due to a hopeful economic recovery from an easing of the lockdown, which prompted foreigners to invest in Thai assets last week, he said.
Poon is however still concerned about the Covid-19 situation in Thailand, as he is not sure if the present pandemic wave has been contained because “not enough proactive testing is being carried out”.
The infection rate in Thailand is higher than 20 per cent, he said, while the World Health Organisation recommends it should be lower than 5 per cent.
Poon said there was room for the baht to fluctuate and weaken as the situation did not clearly point to an improvement.
He suggested keeping an eye on the virus situation 3-4 weeks after the first week of lockdown easing.
The baht might weaken if there is a new wave, he noted.
However, the Thai currency might strengthen to the key support level of 32 to the US dollar if foreigners invest to support the baht in the short term, he added.
Euro-area inflation jumps to decade-high 3% in test for ECB
Euro-area inflation jumped to the highest in a decade in August, testing policymakers insistence that a post-crisis spike in cost pressures should prove temporary.
Consumer prices rose 3%, exceeding the predictions of all 37 economists in a Bloomberg survey. A measure of core inflation that strips out volatile items such as energy and food reached 1.6%, the highest since 2012.
The data will heighten the European Central Bank’s communication challenge as a global supply squeeze and one-time factors drive up costs, while the pandemic threat persists. Viewing faster inflation as temporary, officials are keeping monetary policy looser than counterparts such as the Federal Reserve, which expects to wind down stimulus soon.
“Today’s release will cause some sweaty palms but has not given much evidence of more structural high inflation,” said Bert Colijn, an economist at ING Bank NV in Amsterdam. “This is not set to sway the ECB towards a more hawkish stance ahead of the September meeting.”
Euro-zone price growth may still keep accelerating for now. Imported inflation in Germany, the region’s largest economy, is running at 15%. Retailers across the 19-nation region plan to jack up prices in the next three months and consumers have already adjusted, saying they’re less likely to make major purchases in the coming year.
A separate report on Tuesday showed France’s inflation rate jumped in August by the most in almost two decades to 2.4%, the highest since 2018. In Italy meanwhile, the pace of price growth reached 2.6%, the fastest since 2012 and a half point above the median forecast of economists.
German bonds extended losses after the euro-zone data, with the yield on 10-year notes up two basis points at -0.42%.
Despite price growth running well above the 2% level the ECB aims to achieve in the medium term, officials led by President Christine Lagarde insist that it will slow again next year. Bank of France Governor Francois Villeroy de Galhau said Monday he sees no risk of overheating in the currency bloc.
A temporary cut to Germany’s sales tax in the second half of last year is lifting inflation readings at the moment, with the country’s central bank expecting rates as high as 5% toward the end of 2021. This month’s rate is also bolstered by the timing of summer sales, which were delayed last year due to pandemic curbs.
With that backdrop, the ECB Governing Council’s view of inflation remains sanguine. While prices are accelerating, the outlook has become cloudier in recent weeks, with coronavirus infections on the rise again and the vaccination rate slowing down, increasing the threat of new restrictions.
According to Colijn at ING, faster inflation remains a risk, with question marks over whether higher raw-material and transport costs will pass through to goods, and if service-sector reopenings will cause price jumps.
“There is some evidence that this effect will start to become more prominent towards the end of the year,” he said. “So hold tight: inflation has the potential to go higher from here.”
U.S. consumer confidence falls to six-month low on delta variant
U.S. consumer confidence dropped in August to a six-month low, suggesting concerns over the delta variant and elevated prices are weighing on Americans views of the economy now and in the coming months.
The Conference Board’s index fell to 113.8 from a revised 125.1 reading in July, according to the group’s report Tuesday. Economists in a Bloomberg survey had called for a decline to 123.
The figures suggest the spread of the delta variant has dented consumers’ views of the economy and threatens to undermine spending on services. The latest spike in Covid-19 infections has already curbed restaurant reservations, airline travel and hotel occupancy. At the same time, Americans are paying more at the grocery store and at the gas pump, which may be further weighing on sentiment.
Stocks fluctuated following the report and Treasury yields edged higher.
The figures follow the University of Michigan’s consumer sentiment index, which plunged to the lowest level since 2011 in August as Americans grew more concerned about the economy’s prospects, inflation and the recent surge in coronavirus cases.
“Concerns about the Delta variant — and, to a lesser degree, rising gas and food prices — resulted in a less favorable view of current economic conditions and short-term growth prospects,” Lynn Franco, senior director of economic indicators at the Conference Board, said in a statement.
The Conference Board’s gauge of current conditions fell to 147.3, the lowest reading since April. Consumers’ views of present business conditions declined, while economic expectations dropped to 91.4, a seven-month low.
Consumers were less upbeat about their future income and job prospects. The share of consumers who said jobs were “plentiful” eased slightly from a multi-decade high.
Consumers said they were somewhat less likely to purchase cars, homes and appliances. Vacation plans for the next six months edged higher.
Stocks drop with valuation near highest since 2000
The stock-market euphoria abated in the last trading day of August as investors assessed whether lofty valuations can withstand the unwinding of pandemic-era stimulus.
The S&P 500 edged lower, while European shares fell on signals the region’s central bank will start discussing a reduction of bond purchases. A decline in financial firms weighed on sentiment after Bloomberg News reported Wells Fargo & Co. risks regulatory action over the pace of restitution. Data Tuesday showed a slide in consumer confidence and the biggest jump in home prices in more than 30 years.
American equities still notched their seventh straight monthly advance — the longest winning streak since January 2018 — amid a tonic of strong corporate profits and moderate monetary policy. As the tapering debate heats up at a time when a coronavirus resurgence is delaying reopenings in some parts of the world, there’s been concern about an overstretched stock market. The S&P 500 is currently trading near its highest valuation levels since 2000.
“Markets are taking a little bit of a breather,” said Cliff Hodge, chief investment officer at Cornerstone Wealth. After making it through strong economic data and stellar corporate earnings, “markets are now trying to grapple with: well, what’s next?”
Fourteen streaks of seven months or longer for the S&P 500 have occurred during the past 60 years, according to data compiled by Bloomberg. History points to three outcomes for the gauge after reaching such milestones.
Five of them ended in the next month as the index fell. Another four were followed by gains of no more than 3.2% before the streaks ended. The other five delivered advances of 9.7% or more before they concluded — including the most recent streak, which lasted 10 months and ran through January 2018.
Corporate insiders, whose buying correctly signaled the bear-market bottom in March 2020, are not afraid of chasing the record-setting rally. More than 1,000 executives and officers have snapped up shares of their own firms this month — the most since May of last year, according to data compiled by the Washington Service.
Some of the main moves in markets:
Stocks
– The S&P 500 fell 0.1% as of 4 p.m. EDT
– The Nasdaq 100 fell 0.1%
– The Dow Jones industrial average fell 0.1%
– The MSCI World index was little changed
Currencies
– The Bloomberg Dollar Spot Index was little changed
– The euro was little changed at $1.1807
– The British pound was little changed at $1.3749
– The Japanese yen was little changed at 110.01 per dollar
Bonds
– The yield on 10-year Treasurys advanced three basis points to 1.30%
– Germany’s 10-year yield advanced six basis points to -0.38%
– Britain’s 10-year yield advanced 14 basis points to 0.71%
Commodities
– West Texas Intermediate crude fell 1% to $68.50 a barrel
SET up for 8th successive day as trade volume soars
The Stock Exchange of Thailand (SET) Index closed at 1,638.75 on Tuesday, up 4.98 points or 0.30 per cent. Transactions totalled THB117.90 billion with an index high of 1,643.76 and a low of 1,628.12 as the SET rose for an eighth successive day.
In the morning session, Krungsri Securities expected the index on Tuesday to rise to between 1,640 and 1,645 before falling back. It cited positive sentiment from the US Federal Reserve signalling it would not rush to raise the interest rate despite expected tapering of quantitative easing.
Market sentiment was also buoyed by the government’s move to ease lockdown measures as domestic infections decline, it added.
However, the SET would face downward pressure from the MSCI rebalance to cut the weight of emerging-market shares by 0.03 per cent (around $112 million), said Krungsri Securities.
The 10 stocks with the highest trade value today were BBL, GULF, KBANK, PTT, INTUCH, ADVANC, CPALL, KCE, GPSC and RPC.
Other Asian indices were up with one exception:
Japan’s Nikkei Index closed at 28,089.54, up 300.25 points or 1.08 per cent.
China’s Shanghai SE Composite Index closed at 3,543.94, up 15.79 points or 0.45 per cent, while the Shenzhen SE Component Index closed at 14,328.38, down -94.98 points or 0.66 per cent.
Hong Kong’s Hang Seng Index closed at 25,878.99, up 339.45 points or 1.33 per cent.
South Korea’s KOSPI Index closed at 3,199.27, up 55.08 points or 1.75 per cent.
Taiwan’s TAIEX Index closed at 17,490.29, up 93.77 points or 0.54 per cent.
The price of gold dropped by THB50 in morning trade on Tuesday.
AGold Traders Association report at 9.25am said the buying price of a gold bar was THB27,750 per baht weight and selling price THB27,850, while gold ornaments cost THB27,257.68 and THB28,350, respectively.
At close on Monday, the buying price of a gold bar was THB27,800 per baht weight and selling price THB27,900, while gold ornaments cost THB27,303.16 and THB28,400, respectively.
Seven-day rising streak to continue for SET as lockdown eased
The Stock Exchange of Thailand (SET) Index dropped by 1.12 points, or 0.07 per cent, to 1,632.65 on Tuesday morning.
The SET Index closed at 1,633.77 on Monday, up 22.57 points or 1.40 per cent. Transactions totalled THB117.38 billion with an index high of 1,634.92 and a low of 1,621.42 as the SET rose for a seventh successive day.
Krungsri Securities expected the index on Tuesday to rise to between 1,640 and 1,645 before alternating to weaken, as there is support for the market conditions after the US Federal Reserve signalled it would not rush to raise the interest rate, despite the reduction of the quantitative easing measure in 2021.
Krungsri Securities added that the index also gained positive sentiment from the government’s move to ease lockdown measures as domestic infections are declining.
“However, there is an expectation of late-sell pressure from MSCI Rebalance reducing the weight of the emerging markets group by 0.03 per cent (around $112 million), which will pressure the index to weaken,” Krungsri Securities said.
It recommended selective buying as an investment strategy:
AOT, KBANK, BBL, CPN, CRC, HMPRO, AAV, BA, MINT, AMATA and WHA, which would benefit from the country’s reopening.
PSL, TTA and RCL, which would benefit from a rise in the freight rate.
CKP, BANPU, GPSC, BCH and CHG, which would benefit from the growth in the third quarter.
Easing of lockdown expected to strengthen baht though worries on Covid remain
The baht opened at 32.44 to the US dollar on Tuesday, unchanged from Monday’s closing rate.
The Thai currency is likely to move between 32.35 and 32.50 during the day, Krungthai Bank market strategist Poon Panichpibool said.
The baht was likely to strengthen due to economic recovery from the easing of the lockdown, which prompted foreign investors to invest in Thai assets last week.
Poon was concerned about the Covid-19 situation in Thailand, as he was not sure if the spread of the virus had been contained because enough proactive testing was not being done. The positive rate in Thailand was higher than 20 per cent, while the World Health Organization recommends it should be lower than 5 per cent.
He added that the baht was likely to fluctuate and weaken as the situation did not clearly point to improvement. He suggested keeping an eye on the virus situation 3-4 weeks after the first week of the lockdown easing.
The support level of the baht would be from 32.30 to 32.40, which is the price range importers are waiting for to buy dollars.
The Bank of Thailand might help the baht avoid volatility and ensure it moves within its range in the short term.
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