Data Shows Thai Stocks Pricing In Negative Sentiment in Middle East during Songkran Day Off

Thailand’s finance ministry said on Wednesday that a conflict between Israel and Iran should have only a limited impact on the Thai economy, provided that the conflict does not spread. However, the equity market told a different story as it was fast to react on sensitive issues.

According to the finance ministry, the economy will continue to be supported by fiscal policy, while the government is closely monitoring the situation, saying that Thailand, Israel and Iran have small amounts of investment, tourism and trading. Meanwhile, the rising commodity prices, especially crude oil, should not see a significant rise if the situation does not escalate, citing Iran only supplying 1.5% of global market.


Despite the attempt to ease concerns, the Thai stock markets reacted negatively to the escalating tensions in the Middle East as the main bourse, SET Index, was down more than 2% on Wednesday, its first trading day after a long Songkran Holiday.

The decline could be due to all negativity pricing in just only one day following a long holiday in Thailand. ASX200 and Hang Seng Index closed nearly flat today, while Nikkei dropped about 1.30% and Kospi fell nearly 1%. However, China’s Shanghai Composite rose more than 2% on Wednesday.


Data showed that global stock markets were down during the past five trading days as well. The Dow Jones Industrial Average and S&P 500 both fell more than 2%, while Nasdaq Composite dropped 1.48%.

Euro Stoxx 50 dipped 0.85% during the period and FTSE 100 decreased 1.26%.

In Asia, Japan’s Nikkei fell 2.85%, S&P/ASX 200 plunged more than 3%, while Korea’s Kospi declined more than 3%. Only China’s Shanghai Composite was up nearly 2% in that span.


It is worth noting that there are other concerns that fuel the plunge in equity markets. Traders were initially concerned about the Federal Reserve’s rate cut following higher-than-expected inflation rate and resilient economic growth.

The Fed’s Chair made things even worse yesterday by saying that inflation has yet to reach the central bank’s target, indicating that interest rate cuts are unlikely in the near future.

Rising oil prices also escalated concerns for inflation as the Brent Crude just broke the $90 level in April, and the West Texas Intermediate was nearly $87 level, both were last seen in October 2023. The latest inflation data was for March.


At one point, odds for Fed’s rate cut this year is down to only one cut, according to CME FedWatch Tool, which is expected to be in September.