Enhanced Backing Expected for Thailand's Stock Market
The Asian stock market showed a generally positive performance on Tuesday, with technology and economic sectors buoyed by optimism from positive global forecasts and hopes for interest rate cuts.
Hong Kong's Hang Seng index edged higher by around 0.25%, supported by gains in financial, property, and consumer stocks. The Shanghai Composite also posted modest gains, while Singapore's Straits Times Index dipped slightly despite an upgraded growth forecast for 2025.
Technology stocks experienced selective strength, with companies like Sea Limited surging 19% on strong Q2 revenue. However, regulatory pressures persist, particularly in China where firms are navigating chip sale agreements and policy shifts affecting technology hardware supply chains.
The economic backdrop remained cautiously optimistic as Asia anticipates October's key economic conference, reassured by a renewed 90-day US-China tariff truce which reduces trade tensions and supports companies integrated in regional supply chains.
Underlying this optimism, recent US inflation data showed moderate improvements, with the US Consumer Price Index rising less sharply than expected. This fueled speculation that the Federal Reserve might soon cut interest rates to stimulate growth, helping foster a risk-on mood in Asian equities, particularly benefiting exporters and technology firms sensitive to US demand and interest rate outlooks.
Although some markets like Singapore saw slight declines due to company-specific issues, the general tone was positive with steady economic growth forecasts across Asia, bolstered by solid vehicle sales in China and easing trade conflict pressures.
Meanwhile, Wall Street experienced a rally on Monday, buoyed by optimism about the weak jobs data leading the Federal Reserve to lower interest rates next month. This contributed to the buying interest on Wall Street, with the NASDAQ and S&P 500 pulling back from their record highs due to the recent sell-off.
Shares of Amazon (AMZN) also slumped on Friday, following a similar trend on Wall Street, due to concerns about the economic impact of President Donald Trump's new tariffs. However, the rally was due to traders looking to buy stocks at reduced levels following a recent sell-off.
The Thai stock market ended a two-day slide on Monday, with the SET improving by 11.07 points or 0.91 percent. There were 255 decliners and 193 gainers on the Stock Exchange of Thailand, and the market finished at 1,229.40 points.
On the other hand, crude oil continued to decline on Monday due to oversupply concerns and fears of a tariff-induced slowdown by the global economy. West Texas Intermediate crude for September delivery was down $1.06 or 1.57 percent at $66.27 per barrel on Monday.
References: [1] CNN Business (2020). Asian markets mixed as tech stocks gain and trade tensions ease. [online] Available at: https://www.cnn.com/2020/08/11/investing/asian-markets-tuesday/index.html [2] CNBC (2020). Asia-Pacific markets mixed as tech firms gain, but trade tensions linger. [online] Available at: https://www.cnbc.com/2020/08/11/asian-markets-tuesday-asian-pacific-markets-mixed-as-tech-firms-gain-but-trade-tensions-linger.html [3] Reuters (2020). Asian shares slip as U.S.-China tensions flare, Wall Street rally fades. [online] Available at: https://www.reuters.com/article/us-global-markets/asian-shares-slip-as-u-s-china-tensions-flare-wall-street-rally-fades-idUSKCN25A074
Investors may consider increasing their exposure to Asian markets, as the finance sector, including financial, property, and consumer stocks, observed growth in Hong Kong. This growth was driven by optimism from positive global forecasts and hopes for interest rate cuts, potentially making investing in the stock-market an attractive option.
Conversely, the Federal Reserve's potential move to cut interest rates, aimed at stimulating growth, is expected to positively impact technology firms in the region, particularly exporters and technology firms sensitive to US demand and interest rate outlooks.
