Kaohoon Morning Brief – 31 October 2022

1) FSS expected SET Index to move within 1,600-1,620pts with improve sentiment after US PCE in line with expectations

Finansia Syrus Securities (FSS) expected the SET to move sideways up in a range of 1,600-1,620, in line with the improved sentiment after, seeing the US inflation was resilient in September. US September PCE was in line with market expectation.

Investors prepare for a 0.75% hike during the FOMC meeting 2-3 Nov and keep eyes on Powell’s post-meeting statement to see signals for next moves. Also, the investors are still eyeing the 2Q22 earnings season this week. FSS like domestic and reopening plays that benefit from the domestic economic recovery and the reopening.


2) China’s factory and service activities fall in October

China’s factory activity unexpectedly fell in October, as the official manufacturing purchasing managers’ index (PMI) came in at 49.2, a drop from 50.1 reading in September, according to the National Bureau of Statistics (NBS). The reading was lower than economist forecasts in a Reuters poll for 50.0 in October.

Meanwhile, China’s October services activity also fell

China’s October services activity fell for the first time since May, as Covid-19 restrictions in many cities during the Golden Week holiday at the beginning of the month weighed on tourism and economic activities. The official non-manufacturing purchasing managers’ index (PMI) for October was 48.7, a decline from 50.6 in September.


3) Goldman Sachs maintains FOMC preview with 75bps hike in November

Goldman Sachs still believes the Federal Reserve will deliver a fourth 75 basis points rate hike at its November meeting, which will raise the target range for the Fed funds rate to 3.75-4%.

The firm now expects 50bps hike in December, 25bps in February and 25bps in March, seeing the funds rate peaking at 4.75-5% by next year.


4) German inflation unexpectedly accelerated in October

German inflation unexpectedly accelerated in October, rising 11.6% from a year earlier, well above economist expectations of 10.9%.

Still, European largest economy was able to deliver a 0.3% economic growth in the third quarter of 2022.