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Gold heads for weekly loss with focus on stimulus talks, virus

EconOct 17. 2020A Twenty kilogram gold brick is handled by a worker at the ABC Refinery smelter in Sydney on July 2, 2020. MUST CREDIT: Bloomberg photo by David Gray 

By Syndication Washington Post, Bloomberg · Yvonne Yue Li, Eddie Spence · BUSINESS, US-GLOBAL-MARKETS

Gold headed for its first weekly decline this month as investors weighed the outlook for fresh U.S. stimulus and rising virus cases in Europe.

Treasury Secretary Steven Mnuchin told House Speaker Nancy Pelosi Thursday that President Donald Trump would personally lobby to get reluctant Senate Republicans behind any deal that they reach. The dollar has been supported during the stalemate, while surging virus cases in Europe have also helped lift the greenback as investors seek safety amid new lockdown measures.

The Bloomberg Dollar Spot Index headed for a weekly gain amid stimulus stalemate after two straight weeks of decline.

“The yellow metal is now tracking closely to other momentum-crash precedents, which suggest continued rangebound markets and consolidation until the next catalyst,” TD Securities analysts led by Bart Melek said in a note. Bullion may be prone to “a CTA liquidation” with the trigger to catalyze a modest liquidation now standing at $1,893 an ounce, they said.

“New offers or withdrawals of negotiations may just be window-dressing ahead of the elections,” said Avtar Sandu, a senior manager for commodities at broker Phillip Futures Pte. “The concern for precious metals traders, and other financial market players, is the size of the second fiscal stimulus package after the election.”

Spot gold was down 0.4% at $1,901.14 an ounce as of 10:53 a.m. in New York, on course for a 1.5% decline this week. Spot silver was little changed, palladium fell 1.3% and platinum added 0.7%. The Bloomberg Dollar Spot Index declined 0.2%.

Still, with the fundamental backdrop remaining positive for gold and silver, “a potential breakout may be on the cards in the not-too-distant future,” said Fawad Razaqzada, market analyst with ThinkMarkets.

Heightened concerns over the economic impact of the resurgent virus cases in Europe and elsewhere mean inflationary pressures will remain weak and that central banks will likely keep interest rates low for even longer, according to Razaqzada. “We have already seen benchmark government bond yields drop noticeably again, especially for European countries,” which boosts the appeal of lower-yielding or non-interest-bearing assets such as gold and silver, he said.

Traders will also keep an eye on trade talks between the U.K. and European Union. Negotiations are set to continue next week even after Prime Minister Boris Johnson said he believes a trade deal is now unlikely. He said the U.K. will now get ready to leave the bloc’s single market and customs union at the end of the year without a new agreement in place.

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Stocks pare gain as tech drops on big options day

EconOct 17. 2020

By Syndication Washington Post, Bloomberg · Rita Nazareth, Claire Ballentine · BUSINESS, US-GLOBAL-MARKETS

Stocks pared gains as giant technology companies dropped, tempering optimism with better-than estimated economic data.

The S&P 500 came off session highs and the Nasdaq 100 fell amid Friday’s expiration of equity options. Amazon.com Inc. slumped after Citigroup Inc. said its statement on a recent sales event lacked something that has been seen in past years: A “biggest day ever” notation. Boeing Co. rallied as Europe’s regulator said the 737 Max plane may return to the region’s skies by year-end. Pfizer Inc. jumped after saying it could seek emergency-use authorization for its covid-19 vaccine in the U.S. by late November if the shot is shown to be effective.

Earlier Friday, equities rallied as U.S. retail sales rose in September at the fastest pace in three months, while consumer sentiment ticked up in early October. Meanwhile, manufacturing production unexpectedly declined last month. The figures underscore the uneven pace of the economic rebound that’s being threatened by a new acceleration in coronavirus infections and Congress’s failure to agree on a fresh stimulus package.

“It’s encouraging we are seeing people willing to spend,” said Jeffrey Kleintop, chief global investment strategist for Charles Schwab, adding that the concern is “if we don’t get a stimulus deal, how much longer can that be sustained?”

House Speaker Nancy Pelosi told Democratic colleagues that a divide persists with the White House over a number of components of the fiscal stimulus she’s attempting to negotiate, even as an agreement nears on a coronavirus testing program. President Donald Trump’s economic adviser Larry Kudlow said in an interview with Fox Business Network it will be difficult for lawmakers to “execute” a relief package before the Nov. 3 election.

Investors also monitored negotiations between Britain and the European Union, which are set to continue next week even after Boris Johnson said he believes a trade deal is now unlikely.

These are some of the main moves in markets:

Stocks

– The S&P 500 was little changed as of 3:54 p.m. EDT.

– The Stoxx Europe 600 Index jumped 1.3%.

– The MSCI Asia Pacific Index fell 0.1%.

Currencies

– The Bloomberg Dollar Spot Index fell 0.2%.

– The euro advanced 0.1% to $1.172.

– The British pound climbed 0.1% to $1.2922.

– The Japanese yen was little changed at 105.40 per dollar.

Bonds

– The yield on 10-year Treasurys gained one basis point to 0.74%.

– Britain’s 10-year yield advanced less than one basis point to 0.182%.

– Germany’s 10-year yield dipped one basis point to -0.62%.

Commodities

– West Texas Intermediate crude fell 0.1% to $40.91 a barrel.

– Gold lost 0.3% to $1,902.22 an ounce.

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Oil slips with global virus surge depressing demand rebound

EconOct 17. 2020

By Syndication Washington Post, Bloomberg · Andres Guerra Luz, Alex Longley · BUSINESS, US-GLOBAL-MARKETS

Oil clung to losses with signs of a shaky U.S. economic rebound and rising global coronavirus cases weighing on the prospect for a demand recovery.

Futures in New York fell as much as 2.2% on Friday and are on track for a 0.3% weekly decline. Record new virus cases from Germany to Portugal are raising the prospect of new lockdown measures, while the U.S. reported the most daily cases in two months. Meanwhile, manufacturing production in the U.S. unexpectedly declined in September following reports this week that applications for state unemployment benefits jumped to the highest since August.

“The covid news just keeps getting worse and worse out there,”said John Kilduff, a partner at Again Capital LLC. At the same time, “these manufacturing numbers go right to the heart of economic activity and energy demand.”

Brights spots in the oil demand outlook this week have done little to change the pandemic-driven malaise that has kept futures in New York stuck around $40 a barrel. Diesel sales in India surged in the first half of October, while a Chinese mega-refiner has been snapping up crude.

“Today’s decline is no surprise, in the same way that new bearish Covid-19 news isn’t unexpected any more,” said Rystad Energy AS analyst Paola Rodriguez Masiu. “Although we will not likely enter such deep lockdowns like in the pandemic’s first wave, we still see restrictions again, and they do have an effect in every aspect of our lives, including fuel consumption.”

As prices struggle to break free from the weight of pandemic-driven demand concerns, the pain is also being felt across the U.S. shale industry. Schlumberger, the world’s biggest oil services provider, expects it to take at least another year to rebuild one measure of profit to pre-pandemic levels.

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SMEs to get targeted aid when blanket support expires next week: BOT

EconOct 17. 2020Roong Mallikamas, assistant governor, briefs reporters on a new financial aid strategy for SMEs at the Bank of Thailand on Thursday. 

By The Nation

The Bank of Thailand (BOT) will shift from a blanket strategy to targeted aid measures for small and medium-sized enterprises (SMEs) affected by Covid-19 when their loan-repayment holiday expires next Thursday (October 22).

The debt suspension covered 1.05 million loans worth a total Bt1.35 trillion, out of total debts of Bt6.89 trillion covered by all government measures, BOT assistant governor Roong Mallikamas said on Friday. The measures, implemented via commercial and state-owned banks, include a debt moratorium, debt restructuring, rate cuts, and others, she said.

The end of the debt suspension would not lead to a spike in defaults, as state-owned banks have extended the measure for another three to six months, covering Bt400 billion worth of loans, she assured.

Meanwhile commercial banks taking care of Bt950 billion in debts have found that the majority of debtors will be able to service their loans, she said. Banks will continue to provide a lifeline for those unable to resume debt payments or only able to make partial payments, in order to prevent their debts becoming non-performing loans (NPLs).

Banks have already contacted all but 6 per cent of this group, Roong said.

Some businesses have recovered to almost pre-Covid-19 levels, including beverage firms, electrical appliance firms and traders, she added. But tourism-related sectors have recovered at a slower pace, with hotels only up to 26 per cent of their pre-coronavirus business.

“Therefore, the central bank has asked banks to shift from blanket aid to targeted support that meets specific demands of individual debtors,” she said.

Extending blanket support could be damaging in the long run, increasing the debt burden of SMEs or leading to exploitation by debtors, she said.

It could also undermine financial stability in the long term, reducing liquidity by about Bt200 billion annually, she added.

The central bank has permitted banks to freeze their loan classifications until the end of this year in order to prevent debts turning bad.

Debtors who could not contact their lenders or could not restructure their debts  could reach the central bank debt-solutions channel via https://www.1213.or.th/App/DebtCase, she added.

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SET drops by nearly 1% due to ongoing political unrest

EconOct 16. 2020

By The Nation

The Stock Exchange of Thailand (SET) Index closed at 1,233.68 on Friday, down 9.28 points or 0.75 per cent. The volume of total transactions was Bt44 billion with an index high of 1,247.89 and a low of 1,226.95.

In the morning session, an analyst at Krungsri Securities said he expected the index to fall to between 1,230 and 1,235 owing to political unrest, which he reckoned would be prolonged.

“Also, many European countries’ move to reimpose lockdown measures to prevent a second Covid-19 wave and the rise in US unemployment figures would pressure the market,” he said.

The top 10 stocks with the highest trade value today were CPALL, PTT, KBANK, STA, STGT, TISCO, SCC, MINT, NER and HANA.

As of 4.30pm, the price of oil dropped by US$0.24 or 0.59 per cent to $40.72 per barrel, while gold rose by $5.50 or 0.29 per cent, to $1,914.40 per ounce.

Other Asian indices were mixed:

Japan’s Nikkei Index closed at 23,410.63, down 96.60 points or 0.41 per cent.

China’s Shanghai SE Composite Index closed at 3,336.36, up 4.18 points or 0.13 per cent, while Shenzhen SE Component Index closed at 13,532.73, down 92.16 points or 0.68 per cent.

Hong Kong’s Hang Seng Index closed at 24,386.79, up 228.25 points or 0.94 per cent.

South Korea’s KOSPI Index closed at 2,341.53, down 19.68 points or 0.83 per cent.

Taiwan’s TAIEX Index closed at 12,750.37, down 77.45 points or 0.60 per cent.

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SET expected to be highly volatile after declaration of emergency

EconOct 16. 2020

By The Nation

The government’s decision to declare a state of emergency to deal with political rallies is causing high volatility in the Stock Exchange of Thailand (SET), an analyst at Asia Plus Securities pointed out.

After protesters surrounding Government House dispersed and announced they would continue rallying, the government put Bangkok under emergency in a bid to control the situation.

An Asia Plus Securities analyst said SET’s condition when the state of emergency was declared the last four times – Black May in 1992, People’s Alliance for Democracy’s protest in 2006, United Front of Democracy Against Dictatorship’s protest in 2010, and People’s Democratic Reform Committee’s protest in 2014 – has been studied and compared.

“We learned that the SET Index experiences high volatility in the short term once the state of emergency is declared, before rising gradually in the next phase,” he said.

He said the SET Index is expected to fluctuate from minus 7.35 per cent to plus 11.17 per cent in the first two weeks after the announcement. It should then rise by 40.7 per cent after a month of the imposition of emergency, then by another 5.69 per cent in two months and 8.21 per cent in three months.

He advised investors to hold 25 per cent of their funds in cash to cope with market volatility and invest 75 per cent in small- and mid-cap stocks that pay high dividends, as well as stocks that are will not be affected by the political unrest.

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RCEP agreement to be signed in November and take effect next year

EconOct 16. 2020

By The Nation

The Regional Cooperation and Economic Partnership (RCEP) agreement is ready to be signed in November, and is expected to take effect in the second half of next year, Auramon Supthaweethum, director-general of the Trade Negotiations Department, said.

The Covid-19 crisis was not an obstacle to RCEP negotiations as the panel was meeting via video conference to summerise all remaining issues and revise the legal document, she said.

At the 8th RCEP Ministers’ Meeting on August 27, through video conferencing, the meeting confirmed that the agreement would be signed at the 4th RCEP Summit during the 37th Asean Summit in Vietnam in mid-November.

The signing method will be discussed with Vietnam as the chair of Asean in 2020.

“The RCEP Agreement will enter into force only if at least half or six Asean members and half of the non-Asean members (three out of six) enact it. As for Thailand, we must seek approval from the Cabinet. After that, there will be a process to seek approval from Parliament. The deal is expected to come into effect as early as around the second half of 2021.” said Auramon.

RCEP will be the largest free-trade agreement (FTA) in the world, comprising 16 member countries with a combined population of almost 3.6 billion (48.1 per cent of world population), combined gross domestic product (GDP) of more than $28.5 trillion (32.7 per cent of world GDP) and total trade value of over $11.2 trillion (29.5 per cent of world trade)

Fifteen countries, with the exception of India, will sign the agreement. The members have not yet been able to respond to India’s concerns about trade deficit with many members.

Even without India, RCEP will cover a population of more than 2.2 billion (30 per cent of world population), total GDP of more than $25.6 trillion (29.3 per cent of world GDP) and trade value of more than $10.4 trillion (27.4 per cent of world trade)

“RCEP members will welcome India to return to the group because India has been a key member of the RCEP talks since negotiations began in 2012 and believes that India’s participation would help RCEP grow the region,” said Auramon.

She said the RCEP agreement would benefit Thailand more than FTAs ​​in the Asean framework, such as Asean-China, Asean-Japan, or Asean-Korea.

She said that Thailand would at least gain from non-Asean members in many ways, such as China, South Korea and Japan to open up new markets and reduce tariffs on Thai products, such as agricultural products namely tapioca flour, fisheries, fruit juices, pineapple, coconut juice, paper, and automotive parts.

In the past, in the framework of the Japan-Thailand Economic Partnership Agreement and Asean-Japan Comprehensive Economic. Partnership reduced tariffs on goods to Thailand to zero, accounting for approximately 88 per cent of the total inventory. South Korea eliminated tariffs on Thailand by about 91 per cent and China by 94 per cent on all products. In the RCEP framework, Thai products will be get even more tax benefit, although not 100 per cent.

“Another thing that we will have is the origin of Made in RCEP products because it is a big package. There will be more options to accumulate origin of goods from member countries to receive mutual tax benefits, including promoting a multilateral trading system of rules and helping the regional economy recover and grow stably. In addition, in regard to the regulations from RCA to FTAs ​​that were recently made in the latter, there would be new chapters such as electronic commerce,” said Auramon.

RCEP comprises 16 countries: Thailand, Malaysia, Indonesia, Singapore, Philippines, Vietnam, Myanmar, Laos, Cambodia, Brunei, China, Japan, South Korea, India, Australia and New Zealand.

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SET remains under pressure from domestic political unrest

EconOct 16. 2020

By The Nation

The Stock Exchange of Thailand (SET) Index fell by 0.29 points, or 0.02 per cent, to 1,242.67 in the morning session on Friday.

An analyst at Krungsri Securities expected the index to fall to between 1,230 and 1,235 due to domestic political unrest, which would be prolonged.

“Also, many European countries’ move to reimpose lockdown measures to prevent a second Covid-19 wave and the rise in US unemployment figures would pressure the market,” he said.

As an investment strategy, he recommended that investors buy:

▪︎ PTTGC, IVL and TOP that will benefit from the rising oil price.

▪︎ TU, STGT, CBG, SCC, IVL, COM7, ASIAN, DELTA and HANA whose third-quarter performance is expected to improve.

The SET Index closed at 1,243 on Thursday, down 21.03 points or 1.66 per cent. Total transactions amounted to Bt54 billion amid escalating political turmoil in Thailand and a standoff in the US over economic stimulus measures.

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Gold price rises from worries over second Covid-19 outbreak

EconOct 16. 2020

By The Nation

The price of gold rose by Bt150 per baht weight in morning trade on Friday, the Gold Traders Association reported.

As of 9.26am, the buying price of a gold bar was Bt28,050 per baht weight and selling price Bt28,150, while gold ornaments were priced at Bt27,545.72 and Bt28,650, respectively.

At close on Thursday, the buying price of a gold bar was Bt27,900 per baht weight and selling price Bt28,000 while gold ornaments cost Bt27,394.12 and Bt28,500, respectively.

Spot gold price moved to US$1,907 (Bt59,514) per ounce in the morning after the price rose by $1.6 to $1,908.9 per ounce at close on Thursday due to mass buy-ups of the precious metal after many countries in Europe reimposed lockdown measures to contain the spread of Covid-19.

Hong Kong gold price rose by HK$90 to $17,620 (Bt70,960) per tael on Friday morning, the Chinese Gold and Silver Exchange Society reported.

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Labour Ministry offers IoT courses to boost skills of country’s workforce

EconOct 16. 2020

By The Nation

The Labour Ministry is planning to have up to 5,000 workers armed with high-tech skills for the internet of things (IoT) industry by next year.

Tawat Benchatikul, director general of the ministry’s Department of Skill Development, said Deputy Labour Surachai Trakulthong visited Eastern Economic Corridor (EEC) labour management centre and the human resource development institute in Chonburi to formulate a concrete action plan for the country’s workforce, including labour procurement, skill development, labour welfare, occupational safety and social security.

Surachai instructed the department to work on upgrading workers’ skills, especially by adopting the latest technology and innovation to boost productivity and create more opportunities for EEC’s 10 target industries to build the confidence investors. 

Tawat said this year, his department has been working under a workforce development plan designed to boost the skills of 6,400 workers this year and 5,440 in 2021. 

Five courses lasting 30 hours each are up for grabs in October and November, namely two related to three-dimensional measuring tools, one on SolidWorks software, one on the GxWork3 software designed by Mitsubishi and one on handling and controlling robotics. 

Meanwhile, the Office of Skill Development in Chachoengsao is offering courses on IoT, automation, robotics and mechatronics, which are open to the general public, new graduates, formal workers and unemployed people with basic skills. Trainees will be given theory and practical lessons to prepare them for employment.