Kaohoon Morning Brief – 24 November 2022

1) FSS expects relaxing sentiment after Fed looking to slow the rate hike

Finansia Syrus Securities (FSS) expected the SET’s sideways-to-sideways-up movement to continue due to continued relaxing sentiment. It came after the Fed meeting minutes showed its officials anticipated slower rate hikes soon, in line with the consensus forecast made throughout November after the meeting at the beginning of the month. As a result, the Dollar Index and U.S. bond yields decreased, which helped risk asset recovery. Although the sharp crude price falls from G7’s considering putting a cap on Russian oil prices may pressure energy today, it would provide bullish sentiment for anti-commodity and power. Also, there should be support from a meeting on 5,203-MW renewable power plants and the Baht strength from the previous quarter. In China, investors should keep a close eye on the covid situation after the lockdown in certain cities.

FSS maintained its bullish view of the Thai economy. It should accelerate in 4Q22-2023 when it is the high season for tourism and spending. It should support mid-to-long-term fund inflows.


2) Fed signals for smaller rate hike

The Federal Reserve agreed that it would go with a smaller rate hike soon after assessing the impact of the monetary policy to the U.S. economy.

Meeting minutes of the U.S. Fed officials earlier this month released Wednesday as one of positive signs in months after its November 2022 meeting that marked a sixth consecutive rate hike and the fourth straight three-quarter point increase, pushing borrowing costs to a new high since 2008.

The market widely expects the Fed to lower aggression in the final meeting of this year in December for a 50 basis points.


3) Oil prices drop amid all negative sentiments in the market

Oil prices edged lower on Thursday after only a day of gains as the Group of Seven (G7) nations looked to put a price cap on Russian oil above the current market level. G7 nations expected to limit Russian oil price in the range of $65-70/bbl.

Meanwhile, the U.S. reported a rise of gasoline stocks by 3.1 million barrels, well over the 383,000 barrel build estimated by analysts. The Energy Information Administration (EIA) showed a 3.7 million barrel draw in crude inventories, compared to a forecast for a drop of 1.1 million barrels.

Moreover, a new Covid-19 wave in China also raised concerns over a decline of oil demand after Shanghai tightened its rules on Tuesday.

As of 9:47 BKK time, Brent crude fell 0.40% to $85.07 a barrel, while West Texas Intermediate decreased 0.24% to $77.75 a barrel. Each benchmark fell 4% yesterday.