Shares rise as US data points to more rate cuts

RECAP: Stocks in the region rose after slightly weaker US labour data reinforced the belief that the Federal Reserve will continue to cut interest rates in November.
The SET index moved in a range of 1,443.56 and 1,482.02 points this week, before closing yesterday at 1,470.10, up 1.8% from the previous week, with daily turnover averaging 55.59 billion baht.
Institutional investors were net buyers of 9.44 billion baht. Foreign investors were net sellers of 5.17 billion, retail investors 4.27 billion and brokerage firms 3.27 million.
NEWSMAKERS: US consumer inflation in September rose higher than expected at 2.4% year-on-year, leading to debate over whether the Federal Reserve will opt for a small rate cut next month or a pause completely.
Atlanta Fed president Raphael Bostic said he was open to the idea of skipping a rate cut in November if economic data has not aligned with the Fed’s targets.
Investors now believe that even the Fed’s expectations to cut rates by 200 basis points over the next two years are too optimistic.
China is expected to announce up to 2 trillion yuan ($283 billion) in fresh stimulus to shore up the economy and confidence. The central bank has set up a 500 billion yuan ($71 billion) fund to provide liquidity to institutional investors to buy stocks.
South Korea’s central bank yesterday cut interest rates by 25bps to 3.25%, the first reduction since mid-2020, and indicated there was room to reduce further.
The Reserve Bank of India kept its key rate unchanged on Wednesday, as expected, but tweaked its policy stance to “neutral”, opening the door for rate cuts amid early signs of a growth slowdown.
New Zealand’s central bank cut its key rate by 50 basis points to 4.75% on Wednesday even though inflation has returned to target, prompting markets to bet on more easing and sending the kiwi dollar skidding.
Germany’s economy is expected to contract by 0.2% in 2024, versus a previous forecast of 0.3% growth, the economy ministry said, making it the only G7 economy to post shrinking output.
Samsung Electronics issued a rare apology and acknowledged on Tuesday it was facing a “crisis” over its competitiveness in the chip sector, reflected in a disappointing profit outlook despite a global AI boom.
Fast Retailing, the world’s third biggest clothing retailer after Zara and H&M, is filling American and European closets with Uniqlo clothes, leading to record revenue despite a slowdown in China. Fiscal 2024 profit jumped 25% to ¥372 billion ($2.5 billion).
Air India is continuing a dramatic turnaround by placing a new order for 85 Airbus planes and could buy more Boeing jets on top of an historic order for European and US jets last year, industry sources said.
Next week’s IPO of Hyundai Motor India, the country’s biggest this year, will likely be priced in the range of 1,865 to 1,960 rupees ($22 to $23) per share, valuing the automaker at up to $19 billion.
Seven & i Holdings, the Japanese 7-Eleven operator, plans to hive off underperforming businesses and focus on convenience stores, as it aims to fend off a $47-billion takeover bid from the Canadian retailer Alimentation Couche-Tard.
The Vietnamese developer Kinhbac City says a subsidiary will partner with The Trump Organization to develop a $1.5-billion golf and hotel project in northern Vietnam.
ByteDance, the Chinese parent of TikTok, has laid off more than 700 workers in Malaysia as it shifts towards greater use of AI in content moderation.
The World Bank has maintained its GDP growth forecast for Thailand at 2.4% this year but revised up the 2025 forecast to 3% from 2.8%.
The committee choosing a new Bank of Thailand board chairman has postponed its decision amid rumblings of interference. The government has been promoting former commerce minister and Shinawatra family loyalist Kittiratt Na Ranong for the job. Former central bank governor Tarisa Watanagase warned about the consequences of political meddling.
Deputy Finance Minister Paopoom Rojanasakul again urged the BoT to start cutting interest rates when it meets next week, saying 25 basis points would be “a good start”. He’d like to see the baht, now around 33.39 to the dollar, weaken to 34.50.
Thai headline inflation rose 0.6% in September, after rising 0.35% in August, still below the central bank’s 1-3% target.
The Ministry of Finance is pushing for a new inflation target of 1.5% to 3.5%, to provide more room to lower interest rates.
Thai consumer confidence dropped in September for a seventh consecutive month to a 14-month low, reflecting concerns over a global economic slowdown and local floods.
Saudi Arabia’s Public Investment Fund (PIF) has entered a partnership with Thailand’s Central Group following the latter’s buyout of the insolvent Signa Group’s interest in the UK department store operator Selfridges. Under the agreement, Central will own a 60% stake and PIF will hold 40%.
The SET-listed energy producer B.Grimm Power is considering investing in “several hundreds of megawatts” of renewable energy in China and Greece as it pushes ahead with efforts to more than double its generating capacity by 2030.
The Securities and Exchange Commission (SEC) is preparing to adjust investment criteria later this year to allow mutual funds and private funds to invest more in digital assets, as interest grows in cryptocurrency.
The Board of Investment had approved a $400-million investment by the tyre-maker Continental to expand its existing facility in Thailand, which is the world’s second largest tyre producer after China.
The Federation of Thai Capital Market Organizations’ (Fetco) Investor Confidence Index hit an all-time high in September, in the very bullish zone at 176, helped by fund inflows, government stimulus and the US interest rate cut.
The Pheu Thai-led government will restart negotiations with Cambodia over an offshore oil and gas field with at least $300 billion in reserves that the countries have been squabbling over since the 1970s.
COMING UP: On Monday, India updates wholesale price inflation. On Tuesday, the UK updates unemployment and inflation figures, and Japan releases trade data. On Thursday, the European Central Bank announces a rate decision, the US reports monthly retail sales and China updates GDP and industrial production. On Friday, the UK reports monthly retail sales and the US announces building permit figures.
Locally InnovestX on Thursday will discuss investment trends. Friday brings the Huawei Cloud Media & Entertainment Forum 2024.
STOCKS TO WATCH: Following major stimulus announcements from Beijing, Asia Plus Securities recommends stocks that should benefit from Chinese economic growth, including STA, TKN, COCOCO, PLUS, IVL and PTTGC.
Trinity Securities says retailers should benefit from more consumption stimulus measures including tax breaks expected before year-end. It also recommends firms tipped to report strong Q3 profits, such as CPALL, CPAXT and BJC. However, investors should wait until Q3 results are reported and buy on fact, focusing on stocks in the discretionary group with attractive valuations that will benefit from consumption stimulus, namely HMPRO and CRC.
TECHNICAL VIEW: InnovestX Securities sees support at 1,450 points and resistance at 1,488. Trinity Securities sees support at 1,451 and resistance at 1,483.