Introduction to the Stock Market
This week, Asian stocks saw a significant increase due to strong economic data that calmed concerns about the US economy. Central banks may also take measures to reduce the negative impact of tariffs on economic growth. The Thai stock market, also known as the SET, had its best week of the year, finishing above 1,200 points. This increase was fueled by hopes that Thailand would get a better deal on tariffs from the US and that the new central bank governor would relax monetary policy.
Market Performance
The SET moved in a range of 1,121.64 and 1,210.01 points this week, before closing on Friday at 1,206.58. This represents a 7.6% increase from the previous week. The daily turnover averaged 50.39 billion baht. Institutional investors were net buyers of 5.09 billion baht, followed by foreign investors at 3.75 billion baht and brokerage firms at 183.40 million baht. Retail investors, however, were net sellers of 9.02 billion baht.
News from Around the World
Indonesian President Prabowo Subianto announced a "new era" of trade relations with the United States after President Donald Trump said he had reduced the country’s tariff rate from 32% to 19%. Jakarta has agreed to erase all duties on US imports and buy $19 billion worth of American products, including 50 Boeing jets. Trump is threatening to impose 30% tariffs on the EU and Mexico if no new trade agreements are reached by August 1. The EU is preparing to retaliate against US tariffs with $84 billion worth of measures covering industrial and agricultural products.
Economic Updates
US inflation increased more than expected to 2.7% in June, from 2.4% in May, signaling that tariffs are affecting prices. China’s economy exceeded expectations in the second quarter, with GDP expanding 5.2% from a year earlier. However, investors are bracing for a weaker second half as exports lose momentum, prices continue to fall, and consumer confidence remains low. China’s exports in June grew more than expected by 5.8%, driven by accelerated shipments before US tariff measures take effect on August 1.
Business News
Canada’s Alimentation Couche-Tard Inc has abandoned its $45.8-billion bid to buy Seven & i Holdings, saying the Japanese 7-Eleven operator had refused "meaningful engagement". Japan’s exports fell for a second month, edging down 0.5% in June from a year earlier, dragged down by sharp falls in the value of car and steel shipments. A record 21.5 million tourists visited Japan in the first six months of the year, a 21% increase year-on-year.
Upcoming Events
On Monday, the Bank of Canada will release a business outlook survey. On Tuesday, Fed chairman Jerome Powell will speak, and on Wednesday, the US will announce existing home sales. On Thursday, the European Central Bank will announce a rate decision, and the US will update manufacturing data and new home sales. On Friday, the US will report durable goods orders, and Russia will announce a rate decision.
Stocks to Watch
Asia Plus Securities expects the Bank of Thailand to cut interest rates once or twice more by year-end to mitigate the negative impact of US tariffs. It recommends rate-sensitive stocks and high-dividend plays, such as TIDLOR, MTC, SAWAD, KKP, TISCO, and SPALI. Defensive stocks, such as hospital operators BDMS, BH, and BCH, are also a good option.
Technical View
CGS International Securities sees support at 1,180 points and resistance at 1,220. InnovestX Securities sees support at 1,165 and resistance at 1,250. The best-case scenario for Thai-US trade talks is a tariff rate of 18-20%, which could lower input costs and! benefit companies such as CPALL, HMPRO, and COM7.
Conclusion
In conclusion, the stock market saw significant increases this week due to strong economic data and hopes of better trade deals. However, there are still concerns about the impact of tariffs on economic growth. Investors should keep a close eye on upcoming events, such as the Bank of Canada’s business outlook survey and the European Central Bank’s rate decision. It’s also essential to consider the technical view and support and resistance levels when making investment decisions. With the right strategy, investors can navigate the complexities of the stock market and make informed decisions to achieve their financial goals.
