Thailand’s SET Index closed at 1,385.94 points, decreased 0.10 points or 0.01% with a trading value of 37.38 billion baht. The analyst stated that the Thai stock market traded narrowly, which conformed to the markets around the world, as investors awaited interest rate direction and dot plot from the US Federal Reserve coming this week, as well as the Thai government’s consideration for Budgetary Procedures Act, B.E. 2567 (2024).
The analyst expected the market to continue trading narrowly tomorrow.
At the start of this year, markets believed that there could be 6-7 rate cuts in total by the end of 2024 with the first cut to be as soon as this month. However, the U.S. Federal Reserve cautiously predicted three cuts in total at the first meeting in January.
This is the first time that markets are on the same page as the central bank’s guidance.
The probability for a rate cut at the meeting this week is down to 2% and the odds of a cut in May are down to around 7%. Chance for a cut in June remains firm at around 55%, according to the CME FedWatch Tool.
The next rate cut after that will be in September and the final one is expected to be in December.
In their latest comments, Goldman Sachs and the Bank of America also expected three rate cuts as well.
Japan’s Cabinet Office announced on Monday that the country’s core machinery orders decreased more than expected, raising concerns for the country over its slow economic recovery.
The country’s core orders, a leading indicator for the capital spending of Japan in the next six to nine months, declined by 1.7% MoM in January, which was larger than a 1% drop expected by economists in a Reuters poll.
Kota Suzuki, an economist at Daiwa Securities, noted that the decline might come from difficulties in the automaker sector and uncertainty on the effect of the New Year’s Day earthquake in Noto Peninsula.
The Cabinet Office also stated that they were uncertain if irregularities in certification tests by Toyota Motor’s affiliate Toyota Industries had any impact on the slump of the sector.
As a result, the drop had prompted the government to downgrade its view of machinery orders from “stalling” to “showing some weakness,” in which it was the first time since November 2022.
The Bank of Japan is expected to make its first pivot on policy rates to a positive territory for the first time in 17 years this Tuesday, according to the Nikkei newspaper.
The most anticipated economic data in Japan came Friday last week as Japan’s biggest companies agreed to raise wages by 5.28% for 2024, which would be the heftiest pay raise in 33 years in Japan.
The BOJ Governor Kazuo Ueda has said several times before that the timing to exit negative rates or shifting stance would depend on the outcome of this year’s annual wage negotiations.
On Monday, Russian President Vladimir Putin warned the West, after winning an election in a landslide, of the possibility of a full-scale World War III if Moscow would face a direct conflict with the U.S.-led NATO military alliance.
Putin stated after winning the biggest landslide in post-Soviet Russian history that everything, in this case a war with NATO, is possible in the modern world, while also suggesting that he did not feel the need for the use of nuclear weapons in Ukraine and that no country would want World War III to happen.
The Russian President continued his reign over the country in an extreme manner on Sunday, with 87.8% of the vote, signifying the highest ever result in Russia’s post-Soviet history, according to an exit poll by the Public Opinion Foundation (FOM).
Vietnam’s main bourse VN Index plunged as much as 3.3% intraday before closing down 1.6% on Monday, following the report by Reuters of the reshuffling of high-level officers.
Reuters reported by citing a letter seen by its reporter that Vietnam’s parliament is set to meet on Thursday to discuss unspecified “personnel issues”. This led to a wide speculation of a reshuffle of the Communist-ruled country’s top leadership with a possibility of a resignation of president Vo Van Thuong.
In a special meeting convened in January last year also saw the then president Nguyen Xuan Phuc signed.
BLS Global Investing sees that the decline was a short profit taking with a short-term negative sentiment in the market. This does not impact the Vietnamese market’s fundamentals, while also maintaining a positive outlook on the market due to its cheap valuation of PE 11.7x, -1SD from 5-year historical average.
The analyst noted that Vietnam’s stock market also outperformed Wall Street this year, hence, a correction to build a new base is understandable.
