Kaohoon Morning Brief – 6 October 2022

1) FSS expects energy sector to lead SET Index after large output cut by OPEC+

Finansia Syrus Securities (FSS) expected the SET to move sideways-to-sideways up within 1,575-1,590 points, in line with global equity markets. They started to slow after sharp rebounds in the last two days. However, energy would continue to lead the market after crude prices extended their rallies due to the OPEC+ meeting outcomes. In particular, they agreed to slash their daily output by two million barrels in November, the highest cut since 2020. The higher crude prices raised the market jitters over the inflation outlook that it may slowly decrease. As a result, the Dollar Index and U.S. bond yields increased again, which pressured risk assets to slow. On the local front, there is yet a fresh catalyst. The spotlight is still on the U.S. inflation for September, which is due next week, and the preview of the 3Q22 earnings season.

FSS stated that it maintained its bullish view of domestic and reopening plays. In particular, 4Q22 is the high season for the tourism industry and spending. FSS recommended its investors hold mid-to-long-term bets after accumulating more stocks on weakness.


2) US mortgage rates hit 16-year high last week

Mortgage rates in the U.S. jumped to a 16-year high at 6.75% last week, according to data from the Mortgage Bankers Association (MBA) released Wednesday. The increase that climbed 1.3 percentage points over seven straight weeks further pushes home buyers off the market as demand continues to dampen amid high loan rates.

The increase in mortgage rates resulted in a more than 14% slump last week in applications to purchase or refinance a home.


3) Liz Truss says cutting taxes is the right decision to do

The new British Prime Minister Liz Truss on Wednesday defended her idea of tax cuts, saying that it was the right thing to do morally and economically.

Her economic growth plans earlier led to a turmoil in the market, plunging the British pound heavily, while the Bank of England had to intervene in the bond market after rising to 5% on the government’s borrowing-funded plans.


4) OPEC+ cuts oil production by 2 million bpd

The Organization of the Petroleum Exporting Countries and its allies known as OPEC+ agreed on Wednesday to a production cut of by 2 million barrels per day from November in an attempt to recover declining crude oil prices in the last few months.

In the first face-to-face meeting since 2020, the group of some of the world’s most powerful oil producers delivered a move that went against the U.S. pledge to lower the burden of global consumers by increasing output to make oil prices even lower.