Thailand’s SET Index closed at 1,384.08 points, increased 16.12 points or 1.18% with a trading value of 45.1 billion baht. The analyst stated that the Thai stock market edged up following the rise of markets in the region. The Thai market started to see more and more positive signs after the US Fed held its interest rate as expected, while most investors foresaw rate cuts in May, raising the belief that the Fed interest rate had already passed its peak. This caused the country’s bond yields to fall, which sent positive effects to finance stocks. Tourism stocks also extended their gain following the increased numbers of tourists.
The analyst expected the market to continue growing next week.
Wall Street is losing hope on seeing the first rate cut in March 2024 after the latest meeting of US Federal Reserve officials that lean toward a more prudent move on restrictive monetary policy, leaving interest rates unchanged between 5.25-5.5 range, which is in line with the market expectation. However, the Fed signalled that it is not ready to start cutting rates as soon as the next meeting that is scheduled to be held in late March.
The US central bank stated that risks to goals are moving into better balance as officials voted to maintain its pace of quantitative tightening, while planning to start in-depth discussion of the balance sheet in March.
Hopes for a rate cut in March has shrunk as the Fed signalled that it is not looking to cut rates in the next meeting as the move is not appropriate until the central bank gains more confidence that inflation is moving sustainably toward 2%.
Meanwhile, the Bank of America pushed out its first rate cut to June, saying that risks to a “later and faster” policy easing cycle are rising. A cut in March is no longer the base case for the market.
A 25 basis points rate cut will follow in September and December, which would total three cuts this year. The bank expected to see a total of 100bps rate cut in 2025.
The Bank of England kept its interest rates at a 16-year high at 5.25% on Thursday as inflation has yet to reach the central bank’s target of 2%.
The market is now watching closely for any signs that could indicate a signal for upcoming rate cuts, following the disappointment by the US Federal Reserve the day before that it was quite sure it will not cut interest rates as soon as March.
According to the data published by the central bank late last year, a sharp fall in energy prices was visible as inflation in December 2023 was at 4%. Economists are now expecting prices to be on course to the BoE’s target in late 2025.
The risk of a slow decline at the end of this inflation cycle prompted the BoE to issue a warning to the market that it may need to keep interest rates at a higher level for an extended period.
