Kaohoon Morning Brief – 1 February 2023

1) FSS is hopeful for short recovery as SET Index maintains above resistance level

Finansia Syrus Securities (FSS) expected Thailand’s SET Index to move in sideways to sideways-up trend, seeing a short-term recovery if the index did not break the 1,670 resistance level as global market is still hopeful for Fed’s decision for a smaller hike at 25 basis points to 4.50-4.75%. After the rate decisions, FSS expected the market to focus on inflation data and growth outlook for the U.S. and Europe economy in the first quarter for any signal that could provide guidance on the severity of economic slowdown.


2) U.S. home price drops for fifth straight month in November

Home prices in the United States of America continued to decline in November as higher mortgage rates put pressure on consumer demand for new houses.

Prices dropped 0.6% on a monthly basis from October to November, marking its fifth consecutive monthly decline, according to the Case Shiller Index. Meanwhile, prices climbed 7.7% nationally on an annual basis in November.

The 10-city composite, meanwhile, increased 6.3% annually, down from 8% in October, and the 20-city composite rose 6.8% in November, following a gain of 8.6% the previous month. In the meantime, price growth slowed in all 20 cities.


3) Fitch expects U.S. CPI to moderate to the mid-3.0% range in 2023

Fitch expects U.S. CPI to moderate to the mid-3.0% range in 2023 and the high-2.0% range in 2024. Likely areas of persistent industrial sector cost pressure include prolonged skilled labor shortages (i.e. airline pilots), as well as structural cost disadvantages, such as elevated energy costs for European manufacturers.


4) Market expects three 25bps rate hikes from Feb-April

The market is fully expected 25 basis point rate hike tonight by the U.S. Federal Reserve as inflation outlook in the world’s largest economy gradually faded. The market also priced in 83% probability for 25bps raise in March and a 42% chance for a 25bps increase in April.