Major stock markets in Asia traded lower on Friday after the report of higher-than-expected inflation data for the U.S. that sent Wall Street to close lower.
Thailand’s SET Index opened at 1,691.16 points, decreased 11.84 points or 0.70%.
As of 10:10 local time in Thailand, Hang Seng Index dipped 0.20%, ASX 200 decreased 0.71% and IDX Composite slipped 0.23%. SSEC traded lower at the open, but turned to 0.20% gain afterward.
Stock markets in Japan are closed for holiday.
Last night, the U.S. announced that the consumer price index jumped by 7.5% in January, higher than the forecast of 7.3% by economists, while representing the fastest pace since 1982. The rise in consumer price followed a 7% annual gain in December.
Meanwhile, U.S. Treasury yields topped 2% on Thursday after key inflation data showed higher-than-expected price pressures.
Asia Wealth Securities (AWS) expected the SET today to move in the range of 1,675-1,710 points. The SET has a chance for a correction from the U.S. inflation that came out slightly higher than what market consensus had expected.
Based on AWS’ previously estimated assumptions that in the case that higher-than-expected inflation, the SET has a chance to be correction in the short-term, including the pressure from the increase in the yield of the U.S. 2-year and 10-year treasury bonds this morning (11 Feb) rose to 1.5868% and 2.035%.
AWS believed that the market reflects and expects the Fed to raise its policy rate by 0.5% in the upcoming FOMC March meeting. This includes the view of James Bullard, chairman of the St. Louis Fed signaled support for the Fed to raise interest rates totaling 1% by July 2022 (negative on tech stocks such as CCET, DELTA, HANA, KCE, NEX, SMT and SVI).
However, the decrease of SET is limited due to 1) higher-than-expected inflation, but not much and (2) market supports stocks that benefited from rising interest rates, stocks based on domestic economic growth that AWS has given weight in the past, including stocks in the banking, consumer goods, retail and local transportation sectors based on the Core Investment portfolio, AWS also recommended investing in KBANK, BBL, TTB, BLA, BEM, BEC, BJC, CRC, CPALL, CPN, MAKRO and HMPRO.The issue to be followed is the minutes of the FOMC meeting next week (17 Feb).
Core Investment
1) Stocks that benefit from recovering domestic purchasing power (short term trading 1 3 months) BEM, SPRC, BEC, ONEE, BJC, CRC, CPALL, OSP, CBG, MAKRO, HMPRO, KBANK, AWC, LH, SC and ORI
2) Low share price, growth 2022 earnings (short term trading 3 months) TTB, BBL, SCB, KBANK, KTB , LPN, PSH, QH, SUSCO, RATCH, STANLY, TRUBB and WIIK
3) Stocks that benefit from the rising interest rate trend (long term trading, more than 6 months) BLA, TIPH, SCB, KBANK, BBL and TTB
4) Dividend Play (long term trading, more than 6 months) KKP, TISCO, TC AP, LH, QH, AP, SPALI, ORI, RATCH, TVO and TASCO
5) DCA Long term accumulative stocks (long term trading, more than 1 year) PTT, AOT, ONEE, BEM, GULF, ADVANC, INTUCH, BDMS, XPG, HMPRO, KBANK and KKP
