Kaohoon Morning Brief – 3 August 2023

1) KSS expects weak trading session after U.S. credit ratings downgraded

Krungsri Securities (KSS) expected a weaker movement in Thailand’s SET Index between 1,540-1,545 points, pressured by the U.S. credit ratings downgrade from AAA to AA+ by Fitch Ratings due to fiscal deterioration over the next three years and high debt burden, resulting in fund flows retreating from risk assets. Meanwhile, declining oil prices are also posting a negative sentiment to the energy stock and investment direction during this period.


2) Jamie Dimon calls Fitch’s downgrading US credit ratings ‘ridiculous’

JPMorgan Chase CEO Jamie Dimon in an interview with CNBC called the Fitch Ratings downgrade of the U.S.  long-term credit rating is ridiculous and added that the rating does not matter as it is the market, not rating agencies, that determines borrowing costs.

He elaborated that it is crazy that other countries have higher credit ratings than the U.S., especially when those countries depend on the stability created by the U.S. and its military.


3) BoE is expected to raise interest rates to 15-year high today

The Bank of England (BoE) is expected to continue raising interest rates on Thursday from 5% to a 15-year high of 5.25%.

The market also weighed on the chance of a surprise 50 basis points rate hike just like what the central bank did in June as inflation remains way above BoE’s target.

Last week, the U.S. Federal Reserve and the European Central Bank both increased rates by 25 basis points. Though the central banks pointed out that they could end the rate-hike cycle, they were open for more hikes if inflation does not slow down to a satisfying level.