Gold glitters as it notches highest price in a year
The price of gold shot up to its highest in a year after surging by THB200 per baht weight in morning trade on Thursday, thanks to the US Federal Reserve signalling it would maintain the interest rate as well as its quantitative easing programme. The weakening dollar was also a factor.
AGold Traders Association report at 9.30am showed the buying price of a gold bar at THB28,100 per baht weight and selling price at THB28,200 while gold ornaments cost THB27,591.20 and THB28,700, respectively.
At close on Wednesday, the buying price of a gold bar was THB27,900 per baht weight and selling price THB28,000, while gold ornaments cost THB27,394.12 and THB28,500, respectively.
The spot gold price on Thursday was US$1,826 (THB59,635) per ounce after Comex gold on Wednesday surged by $15.10 to $1,825 per ounce, the highest in a month.
The Hong Kong gold price meanwhile rose by HK$110 to $16,920 (THB71,145) per tael, the Chinese Gold and Silver Exchange Society reported.
U.K. inflations jump tests BOE relaxed view on stimulus exit
U.K. inflation unexpectedly accelerated to the highest level in three years in June, driven by widespread price increases that challenge the Bank of Englands argument that the surge will be temporary.
Consumer prices climbed 2.5% from a year earlier, exceeding all but two estimates in a Bloomberg survey of 35 economists. Prices rose from May in the vast majority of 12 broad divisions, the Office for National Statistics said Wednesday. The pound advanced.
The jump will strengthen views among investors and a growing minority of economists that the BOE will raise interest rates as soon as next year as the economy recovers from the pandemic. It also shows how inflation is emerging as a test for central banks in major economies, coming a day after U.S. consumer-price growth unexpectedly surged to 5.4%.
“Critically, we do not believe that higher inflation will be fully transitory,” Kallum Pickering, a London-based senior economist at Berenberg, who expects the first U.K. rate hike in August next year, wrote in a report.
While the risk of current price growth becoming more entrenched is still modest, “the warning from history is clear — all periods of high sustained inflation appear temporary at first,” he said.
The U.K.’s 10- and 30-year government bonds led a rise in yields across the curve after the data, climbing four basis points. The spread between two- and 30-year debt, which reflects the balance between tightening prospects and inflation expectations, steepened slightly after two days of flattening. The pound gained 0.2%.
The BOE predicts that inflation, which was as low as 0.2% last August, will exceed 3%. But crucially for policy, the central bank has maintained that the pressure would prove temporary.
What Bloomberg Economics Says …
“Inflation surprised to the upside again in June, putting it on course to breach 3% by the end of the year. But the detailed data still indicate the pick up will be transitory — we expect price gains to be back below target by spring next year. The news is unlikely to prompt a significant reappraisal of the outlook by the Bank of England, which expects the spike in inflation this year ultimately to fade.”
— Dan Hanson, senior economist. Click for the REACT.
Governor Andrew Bailey this month dismissed calls for imminent action by saying officials shouldn’t overreact to transitory factors affecting prices.
Cathal Kennedy, European economist at RBC, said the Monetary Policy Committee will likely wait to see how the labor market recovers after the government winds down the furlough program in September.
“This is the key, this is we think the key for the outlook,” he said in an interview. “For all the talk about anecdotal problems with hiring and shortages in certain sectors, there are still two million in the furlough scheme so it’s difficult to get a true handle on what’s going on in the labor market at present.”
But Robert Wood, an economist at Bank of America Merrill Lynch, said while he still expects inflation to ease back next year, some BOE policy makers may choose not to look through the surge. “The inflation news = more hawkish BOE,” he wrote.
Wednesday’s release showed prices for food, used cars, clothing and footwear, eating and drinking out, and fuel rose in 2021 but mostly fell in 2020, resulting in the largest upward contributions to the change in the inflation rate. Motor fuel costs rose 20.3% from a year earlier, the most in more than a decade.
The ONS said people were seeking alternatives to public transport and paying more for it, using savings built up during lockdowns. A global shortage in semiconductors held back production of new cars, forcing many to turn to the second-hand market. Prices for used vehicles rose 4.4% between May and June, the strongest increase on record.
These gains were partially offset by a large downward contribution from games, toys and hobbies, where prices fell this year but rose a year ago.
A separate report showed pricing pressures in manufacturing eased slightly in the last month. Manufacturing raw material costs rose 9.1% from a year ago in June, slower than the 10.4% gain the month before. Economists had expected an acceleration. The price of goods leaving factories rose 4.3% from a year ago, less than the gain a month earlier.
Published : July 15, 2021
By : Syndication Washington Post, Bloomberg · Andrew Atkinson, Libby Cherry
Markets wrap: U.S. stocks edge higher; treasury yields decline
Megacap tech stocks led the S&P 500 marginally higher and bond yields fell as investors turned to defensive favorites with Federal Reserve Chairman Jerome Powell making the case for maintaining economic stimulus.
The S&P 500 closed slightly higher with Powell emphasizing in Congressional testimony that the U.S. economic recovery still hasn’t progressed enough to begin scaling back asset purchases. Apple, Google parent Alphabet and Microsoft hit record highs. Bank of America dropped after second-quarter earnings failed to impress investors, while Wells Fargo & Co. gained.
The 10-year U.S. Treasury yield retreated below 1.4% and the dollar declined. Powell added that inflation is likely to remain high in coming months before moderating.
“This supports our view that the Fed wants the economy to run hot and will tolerate a near-term overshoot in inflation,” said Steven Ricchiuto, U.S. chief economist at Mizuho Americas.
A report earlier showed prices paid to U.S. producers rose in June by more than expected, indicating pressure is mounting on companies to pass along higher costs to consumers. The June U.S. consumer inflation print on Tuesday topped all forecasts and pointed to higher costs associated with the reopening from the pandemic. Powell reiterated that Fed officials expect such pressures to be transitory but some commentators see a risk of more durable increases that could force a quicker-than-expected reduction in stimulus.
“The Fed remains laser-focused on the employment situation,” said Ross Mayfield, investment strategy analyst at Baird. “So while the recovery in parts of the economy is totally complete and has even surpassed pre-covid levels, the fact that we’re still about 7 million short of pre-pandemic nonfarm payrolls, labor force participation is weak, and the unemployment rate is above 4-5% means the Fed will remain accommodative. But no doubt the inflation numbers are starting to put them in a bind.”
Global stocks remain close to a record and a range of other factors are influencing the outlook. They include the spread of the more contagious Covid-19 delta variant, the possibility of a peak in earnings and economic growth, and U.S. fiscal spending plans.
Oil fell with gasoline and distillate inventories rising as well as an increase in the U.S production during peak summer demand.
Here are some events to watch this week:
– Bank of Korea monetary decision Thursday
– Bank of Japan interest rate decision Friday
These are some of the main moves in financial markets:
– – –
– The S&P 500 rose 0.1% as of 4:05 p.m. New York time
– The Nasdaq 100 rose 0.2%
– The Dow Jones Industrial Average rose 0.1%
– The MSCI World index was little changed
– – –
– The Bloomberg Dollar Spot Index fell 0.5%
– The euro rose 0.5% to $1.1835
– The British pound rose 0.3% to $1.3859
– The Japanese yen rose 0.6% to 109.97 per dollar
– – –
– The yield on 10-year Treasuries declined seven basis points to 1.35%
– Germany’s 10-year yield declined three basis points to -0.32%
– Britain’s 10-year yield was little changed at 0.63%
– – –
– West Texas Intermediate crude fell 3.4% to $72.72 a barrel
– Gold futures rose 1% to $1,828.20 an ounce
Published : July 15, 2021
By : Syndication Washington Post, Bloomberg · Kamaron Leach, Natalia Kniazhevich
Gold hits four-week high as Feds Powell eases stimulus concerns
Gold climbed to a four-week high as inflation concerns boosted demand for the metal as a store of value while Federal Reserve Chair Jerome Powell reassured investors on the outlook for stimulus. Copper and most other base metals fell.
Powell said Wednesday in congressional testimony that the recovery hasn’t progressed enough to begin paring the central bank’s monthly asset purchases. Data released on Tuesday showed prices paid by U.S. consumers surged in June by the most since 2008.
Gold has been on the mend after its worst month since 2016 in June, when it was hurt by signals that the Fed could increase interest rates sooner than expected to counter inflation. Stimulus by central banks and governments since the pandemic helped bullion reach a record high in 2020, but vaccine rollouts and reopening economies have eroded demand for the metal as a haven.
“The market seems to have decided that the tapering talks will not be hurried in light of the latest big jump in inflation,” said Fawad Razaqzada, a market analyst at ThinkMarkets. For now, “the market is still giving the Fed the benefit of the doubt by the looks of things,” he said.
Spot gold gained 0.7% to $1,820.14 an ounce by 10:39 a.m. in New York, after touching $1,829.89, the highest since June 16. Silver and platinum also climbed, while palladium dropped. The Bloomberg Dollar Spot Index lost 0.5%, adding to demand for bullion as an alternative asset.
Nickel led a decline in base metals on the London Metal Exchange as China underlined its commitment to containing commodity prices and the surprise surge in U.S. consumer prices fueled inflation worries. Nickel slipped 1.1%, while copper lost 0.5%.
Published : July 15, 2021
By : Syndication Washington Post, Bloomberg · Yvonne Yue Li, Eddie Spence
The Stock Exchange of Thailand (SET) Index closed at 1,569.70 on Wednesday, down 1.29 points or 0.08 per cent. Transactions totalled THB72.58 billion with an index high of 1,573.04 and a low of 1,561.00.
In the morning session, Krungsri Securities expected the day’s index to rise to between 1,575 and 1,585 points on the higher oil price and the Thai government’s fresh economic relief measures.
However, it forecast uncertainty over reports that the US Federal Reserve was considering an interest rate hike to tackle inflation, while also expecting the rise in domestic Covid-19 cases to pressure the index.
The 10 stocks with the highest trade value today were GPSC, PTTGC, KBANK, PTT, GUNKUL, CBG, HANA, BBL, CPF and JMART.
Other Asian indices were down:
Japan’s Nikkei Index closed at 28,608.49, down 109.75 points or 0.38 per cent.
China’s Shanghai SE Composite Index closed at 3,528.50, down 38.02 points or 1.07 per cent, while the Shenzhen SE Component Index closed at 15,056.32, down 132.98 points or 0.88 per cent.
Hong Kong’s Hang Seng Index closed at 27,787.46, down 175.95 points or 0.63 per cent.
South Korea’s KOSPI closed at 3,264.81, down 6.57 points or 0.20 per cent.
Taiwan’s TAIEX closed at 17,845.75, down 1.77 points or 0.0099 per cent.
THAI ready to deliver cargo to 22 destinations in Asia, Europe, Australia
Thai Airways International (THAI) is offering cargo services to 22 destinations in Asia, Europe and Australia in line with its flights scheduled between July and September this year, THAI’s chief commercial officer Nond Kalinta said on Wednesday.
Cargo will be delivered to the following destinations:
• Asia: Round-trip flights from Bangkok to Delhi, Mumbai, Chennai, Osaka, Nagoya, Seoul, Tokyo (Narita), Tokyo (Haneda), Jakarta, Manila, Singapore, Taipei and Ho Chi Minh. One-way trip from Hong Kong to Bangkok.
• Europe: Round-trip flights from Bangkok to Frankfurt, Copenhagen, London, Zurich, Paris and Stockholm.
• Australia: Round-trip from Bangkok to Sydney and Auckland.
THAI Cargo provides transportation for agricultural and industrial merchandise such as vegetables, fruits, frozen products, electronic appliances, vehicle spare parts, medicines and vaccines.
Despite the temporary suspension of passenger flights, THAI has operated more than 3,500 cargo flights since April last year.
THAI Cargo also offers charter flight services to destinations that it normally flies to.
THAI is also providing normal passenger services in line with its flight schedule from July to September. The airline strictly complies with Covid-19 prevention measures set by the Public Health Ministry, the Centre for Covid-19 Situation Administration and the Civil Aviation Authority of Thailand.
Contact cargocharter@thaiairways.com, THAI Cargo sales office or visit thaicargo.com for more information.
THAI ready to deliver cargo to 22 destinations in Asia, Europe, Australia
SET likely to rise on higher oil price, govt’s economic relief measures
The Stock Exchange of Thailand (SET) Index dropped by 1.05 points or 0.07 per cent to 1,569.94 on Wednesday morning.
Krungsri Securities expected the day’s index to rise to between 1,575 and 1,585 points on a higher oil price and the government’s economic relief measures.
However, it forecast uncertainty after reports that the US Federal Reserve was considering the possibility of raising the interest rate to tackle increasing inflation, while the rise in domestic Covid-19 cases would pressure the index, it said.
It recommended investors buy:
▪︎ PTT, PTTEP and Banpu, which benefit from the rising oil price.
▪︎ Hana, KCE, TU, CPF, Asian and EPG, which benefit from a weakening baht.
▪︎ BCH, CHG, BDMS, HMPro, Global, DoHome, BEM, CKP, CBG, Ichi and GPSC, whose second-quarter business turnover is expected to improve.
The SET Index closed at 1,570.99 on Tuesday, up 21.15 points or 1.36 per cent. Transactions totalled THB75.22 billion with an index high of 1,571.82 and a low of 1,555.88.
The baht opened at 32.66 to the US dollar on Wednesday, weakening from Tuesday’s closing rate of 32.60.
The Thai currency is likely to move between 32.60 and 32.75 during the day, Krungthai Bank market strategist Poon Panichpibool said.
He said foreign investors decided to sell their assets in Thailand due to uncertainty caused by the Covid-19 situation in the country, and this situation would lead to a gradual weakening of the baht.
Poon believed a strengthened dollar – one factor that pressures the baht – could “vanish”. He explained that the dollar appreciation occurred due to a high inflation rate in the US. The situation could ease if Federal Reserve Chairman Jerome Powell states that the inflation is only temporary and the Fed will not implement a relaxed, financial policy.
Another factor that can halt the appreciation of the dollar is if the Covid-19 situation in Europe becomes less severe in the next one or two weeks, Poon added.
The price of gold in Thailand rose by THB50 per baht weight in morning trade on Wednesday amid uncertainty over the surge in US inflation and the Covid-19 situation.
However, the price remained unchanged compared to the rate in opening trade on Tuesday.
A Gold Traders Association report at 9.29am showed the buying price of a gold bar at THB27,850 per baht weight and selling price at THB27,950 while gold ornaments cost THB27,348.64 and THB28,450, respectively.
At close on Tuesday, 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.
The spot gold price on Wednesday was US$1,810 (THB59,063) per ounce after Comex gold on Tuesday rose by $4 to $1,809.90 per ounce.
The Hong Kong gold price meanwhile dropped by HK$10 to $16,740 (THB70,324) per tael, the Chinese Gold and Silver Exchange Society reported.
Biden team mulls digital trade deal to counter China in Asia
White House officials are discussing proposals for a digital trade agreement covering Indo-Pacific economies as the administration seeks ways to check Chinas influence in the region, according to people familiar with the plans.
Details of the potential agreement are still being drafted, but the pact could potentially include countries such as Australia, Canada, Chile, Japan, Malaysia, New Zealand and Singapore, according to one of the people, who asked not to be identified because the process isn’t public.
The deal could set out standards for the digital economy, including rules on the use of data, trade facilitation and electronic customs arrangements, according to another person. It also would show the Biden administration is interested in pursuing new trade opportunities after spending its first months focused more on enforcing existing deals than advancing negotiations with the U.K. and Kenya that were inherited from the Trump administration.
Perhaps most important, the policy would represent an early effort by the Biden administration to present an economic plan for the world’s most economically and strategically significant region after President Donald Trump’s decision to withdraw from negotiations for the Trans-Pacific Partnership trade deal in 2017.
A White House official said Monday night no decisions had been reached, but that the administration was intent on deepening its relationship with the Indo-Pacific region in many areas, including digital trade. The Office of the U.S. Trade Representative declined to comment.
Chinese Foreign Ministry Spokesman Zhao Lijian told a news briefing Tuesday in Beijing that he wasn’t aware of the potential proposal, but said: “China follows the principles of openness, inclusiveness and win-win cooperation, and remains committed to working with neighboring countries to promote regional development.”
Advocates for such an accord, including former acting Deputy U.S. Trade Representative Wendy Cutler, suggest that it could draw on existing arrangements in the region, including the U.S.-Japan Digital Trade Agreement, as well as other agreements struck between regional nations such as the Singapore-Australia Digital Trade Agreement and the Singapore-New Zealand-Chile Digital Economy Partnership Agreement.
“Australia and Singapore are the front-runners, but needless to say there’s opportunity for other similar arrangements, including in the Southeast Asia region,” Will Hodgman, Australia’s high commissioner to Singapore, told Bloomberg Television on Tuesday. “So we’ll look with interest as to what’s unfolding with respect to other countries.”
A digital trade agreement would “get the United States back in the trade game in Asia, while it considers the merits of rejoining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership,” Cutler, a longtime trade negotiator who’s now vice president of the Asia Society Policy Institute, wrote in an April op-ed together with Joshua Meltzer, a senior fellow at the Brookings Institution.
“We’re very much in favor of the negotiation of a digital agreement, particularly in the absence of TPP,” said Charles Freeman, the senior vice president for Asia at the U.S. Chamber of Commerce in Washington. “We’d like to see some sort of forward-looking, rules-based agreement in the region, in particular as a model for a global agreement. We think the time to do it is now.”
Such an agreement could sidestep at least some of the political pitfalls which have stymied previous trade negotiations, including opposition from labor unions. It also wouldn’t need approval in Congress, where opposition among progressive Democrats has blocked some deals for years. Even among Republicans there’s little support for comprehensive free-trade pacts after Trump’s criticism of deals reached by his predecessors.
“One of the many challenges with modern trade policy is figuring out how do you balance the various competing interests in a comprehensive deal with manufacturing, labor, agriculture, services, rules for the environment,” said Nigel Cory, associate director of trade policy at the Information Technology & Innovation Foundation, a non-partisan think tank. “It’s a very challenging and complicated task, whereas with digital-trade-specific agreements it’s a little more straightforward.”
Still, the Biden administration will have to square the proposal with its “worker-centered trade policy,” outlined by U.S. Trade Representative Katherine Tai.
Some administration officials have publicly hinted at a potential agreement.
“For the United States to be really effective in Asia we’re going to need to make clear that we have an economic plan, a series of engagements and you will see pieces of that over the course of the next little while,” Kurt Campbell, the White House’s top official for Asia, told an event on July 6. Campbell added that the administration was looking into “what might be possible on the digital front,” without elaborating.
Before taking office, Biden said that he wouldn’t pursue new trade pacts until his administration had made investments in American workers and communities. A move toward a digital trade deal would be consistent with Biden’s “get-your-own-house-in-order” approach to U.S.-China competition, said Kendra Schaefer, head of digital research at consultancy Trivium China.
“While the U.S. is well behind China in terms of outlining the shape of its future digital economy, and cannot compete with the speed of China’s data policy rollout, it certainly can compete on data by leveraging its international relationships to push forward international consensus-based data policy,” Schaefer said, adding that was “something China has struggled to do.”
Published : July 14, 2021
By : Syndication Washington Post, Bloomberg · Peter Martin, Eric Martin, Saleha Mohsin
THAI ready to deliver cargo to 22 destinations in Asia, Europe, Australia
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