The Thai market saw a sharp drop on Monday, following a downward trading trend among Asian bourses in response to comments made by US Federal Reserve chairman Jerome Powell warning of more interest rate hikes.
As of 10.03 a.m. Thai time, the SET index lost 22.24 points, or 1.35%, to 1,622.54, with a trading value of THB7.58 billion.
When speaking at Jackson Hole on Friday, Powell signaled the expected need for restrictive monetary policy for some time to manage excessive inflation and warned against relaxing monetary conditions prematurely. He also said that the U.S. economy will feel “some pain” from rising interest rates and that the trend toward higher rates is likely to continue “for some time.”
“While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses,” Powell said. “These are the unfortunate costs of reducing inflation. But a failure to restore price stability would mean far greater pain.”
Krungsri Securities expected the SET to drift lower towards 1,620 – 1,630 support after the Fed chairman signaled further rate hikes, which investors fear could slow down the economy and job market. Fedwatch data indicates a 75 bps hike at the Sep 20-21 meeting. However, there could be an intraday rebound led by gains in energy counters (crude price remains high) and stocks with specific catalysts.