Thailand’s SET Index closed at 1,359.94 points, decreased 4.33 points or 0.32% with a trading value of 40.18 billion baht. The analyst stated that the Thai stock market decreased as investors monitored potential conflicts in the Middle East, causing a slowdown in stock purchasing, while there were also selloffs of stocks to mitigate risks. The market was also pressured by the decline in retail stocks, especially BJC, in which concerns were raised over a slower-than-expected 1Q24 earnings report.
The analyst expected the market to trade sideways as investors awaited the announcement of 1Q24 earnings reports from listed companies and export figures. As for factors from foreign countries, investors kept their eyes on the resolution of the US Federal Reserve meeting and labor sector figures.
The emerging scenario of slowing growth and persistent inflation in the U.S. economy is posing challenges for the Federal Reserve, creating a situation that may not be a complete nightmare but is certainly causing some concern.
Data released for the first quarter revealed that the U.S. economy expanded at a sluggish pace of 1.6% annually, the slowest rate in almost two years, with inflation running at nearly double the rate of the previous quarter and hitting a one-year high.
The combination of these two factors suggests a mild stagflationary environment that is likely to complicate policymaking in the upcoming weeks and months.
Market reactions were sharp, with stocks declining, Treasury yields rising, and futures traders adjusting their expectations for Fed rates. A series of anticipated rate reductions have now dwindled, with the market revising its outlook from expecting six cuts to only one.
The Bank of Japan (BOJ) decided to keep its policy rate steady on Friday following the conclusion of its monetary policy meeting, leaving the benchmark policy rate at 0%-0.1%.
This decision aligns with the expectations of economists polled by Reuters. Despite the anticipated outcome, the move follows a lower-than-expected April inflation report, with the core inflation rate recorded at 1.6%, below the Reuters expectations of 2.2%.
Meanwhile, there was no specific mention from the BOJ regarding the yen’s performance, which recently breached the 156 level against the U.S. dollar and has been on a weakening trend since the bank terminated its negative interest rate policy last month and eliminated its yield curve control policy.
The central bank also unveiled its second-quarter economic outlook for Japan, revising its inflation forecast for fiscal 2024. The BOJ now anticipates inflation to range between 2.5% and 3% for fiscal 2024, an increase from the 2.2% to 2.5% forecasted in January.
However, the bank expects inflation to moderate to “around 2%” in the subsequent fiscal years of 2025 and 2026, while also revising its GDP growth projections for fiscal 2024 to a range of 0.7% to 1%, lower than the 1%-1.2% growth forecasted in January.
The BOJ acknowledged the persistent uncertainties surrounding the domestic and international economic and financial landscapes. However, if the projected forecasts materialize, accompanied by an increase in inflation, the central bank affirmed its readiness to “adjust the degree of monetary accommodation.”
