The Stock Exchange of Thailand (SET) index plunged below 1,400 points on Friday ahead of the three-day weekend, as other regional markets also tracked Wall Street’s overnight declines amid hawkish statements from the US Federal Reserve about further US interest rate hikes.
The Thai bourse was in negative territory throughout the morning session and fell to 1,399 points as the afternoon session began at 2.30pm.
The SET Index closed down 23.69 points to end the week at 1,399.35, down 1.7% on the day and a decrease of 3.4% from 1,450.75 the previous week, in turnover worth 52.9 billion baht. It was the first time since November 2020 that the index had closed below 1,400.
Rakpong Chaisuparakul, senior vice-president at KGI Securities (Thailand), said US stock markets pulled back overnight, pressured by rising concern about the US interest rate outlook.
Weekly US jobless claims totalled 198,000, below market expectations, indicating continued strength in the US labour market, he said.
Fed chairman Jerome Powell told the Economic Club of New York on Thursday that the strong economy and tight labour market keep the could keep the central bank on course to hike the rates further, as US inflation is still too high.
However, he appeared to indicate that no change in the key rate would take place at the next policy meeting on Oct 31 and Nov 1.
Most investors on the Thai market, meanwhile, opted to stay on the sidelines ahead of the three-day holiday, given prevailing market uncertainties, including rising global bond yields and the fluid situation between Israel and Hamas, Mr Rakpong noted.
On the domestic side, the government once again postponed the announcement of funding details of its 560-billion-baht digital wallet programme, the centrepiece of its economic revival plan.
Deputy Finance Minister Julapun Amornvivat also said the introduction of the handout would be delayed from Feb 1 because creating a secure system will take more time, However, he insisted it would start no later than March 31.
Asian stock markets fell on Friday, after the US stock markets were down by 0.7% to 1.5% overnight and European bourses declined by 0.3% to 1.2%, said Asia Plus Securities.
“The Fed is still committed to bringing inflation down to the target of 2%, from 3.7% year-on-year now. Mr Powell’s hawkish signals have brought the US 10-year bond yield up to a 16-year high of 4.99%,” the brokerage said in a research note on Friday.
The CME FedWatch Tool sees a 92.2% probability that the Fed will hold its interest rate at its next meeting and then raise it to 5.75% in December.
“This is leading to fund outflows from risk assets. Asian currencies weakened sharply, led by the Indonesian rupiah and Malaysian ringgit. As a result, the Indonesian and Malaysian central banks are raising their interest rates,” Asia Plus noted.
The baht may weaken further, so fund outflows are likely from Thai stocks, it added.