Kaohoon Morning Brief – 19 August 2022

1) FSS expects energy sector to support SET Index after huge jump in crude prices

Finansia Syrus Securities (FSS) expected the SET Index to move sideways-to-sideways up within 1,630-1,645 points. Energy should support the index after crude prices surged by 4% yesterday. Generally, the market still lacks new short-term catalysts. The Fed rate hike at its meeting in late September remains uncertain after Fed presidents offered mixed comments on whether they should maintain its pace at 0.75% or decrease it to 0.50%. However, we still believe the SET will outperform its peers in other regions due to the rising economic and corporate earnings outlook, in line with the reopening. Strategically, we still focus on domestic and reopening plays, especially laggards, after the SET’s recovery of over 7% in the past month limits its short-term upside. Besides, we may see retreats, particularly when foreign investors slow their purchases and record sizable short bets on the Index Futures.


2) US citizens filing unemployment benefits fall for the first time in three weeks

Applications for US unemployment benefits for the week ended August 13 unexpectedly fell for the first time in three weeks, signalling that demand for labour market remains is improving.

Initial unemployment claims decreased by 2,000 to 250,000 last week, according to the Labor Department data reported on Thursday.

The median estimate in a Bloomberg survey of economists estimated for a higher figure of 264,000 applications.


3) Turkish central bank shocks markets with full percentage cut amid inflation near 80%

Turkey surprised the market with an interest rate cut by a full percentage point on Thursday despite consumer prices in the country sitting near 80%. The key policy rate stayed at 14% for the last seven months.

The Turkish lira dropped 0.9% against the greenback at more than 18.1 per dollar after the cut.

The move by the Turkish government shocked the market as central banks around the world are ready to jump on a rate hike to ease the rising inflation rate in their countries.

According to the statement by the Turkish central bank on Thursday, the rate cut  was due to expectations for the “disinflation process to start” while there are signals of a “loss of momentum in economic activity.”


4) Oil prices surge amid larger-than-expected drop in U.S. stockpile

Oil prices surged for the third-straight day on Thursday as investors expected higher demand in the market after a larger-than-expected drop in U.S. crude stockpile.

Brent crude settled 3.1% higher on Thursday, while West Texas Intermediate rose 2.7%.