Winning Streak May End For Thai Shares

The Thai SET index, after two consecutive sessions of gains, is expected to face a soft opening on Friday, influenced by a weak global market outlook ahead of critical U.S. inflation data. Wall Street closed lower on Thursday, with major indices down between 0.38% and 0.50%, driven by ongoing concerns regarding the artificial intelligence trade and renewed uncertainty about the interest rate trajectory following upbeat U.S. economic data. Investors are now awaiting the Commerce Department's August personal income and spending report, which includes the Federal Reserve's preferred PCE inflation readings.

Analysis

The Stock Exchange of Thailand (SET) is poised for a muted session after two consecutive days of gains that accumulated over 1.2%, bringing the index to just under the 1,290-point level. The recent rally, which saw broad-based strength across multiple sectors and a 0.77% climb on Thursday, is now facing significant external headwinds. A weak lead from Wall Street, where major indices like the S&P 500 and NASDAQ fell by 0.50%, is setting a negative tone for Asian markets. The U.S. downturn was driven by a combination of concerns over the near-term outlook for the artificial intelligence trade and renewed uncertainty regarding the path of interest rates following strong economic data. Market sentiment is overwhelmingly cautious ahead of the U.S. Commerce Department's release of August personal income and spending data, which includes the Federal Reserve's preferred PCE inflation gauge. In contrast to the equity market weakness, West Texas Intermediate crude oil edged 0.12% higher to $65.07 per barrel, supported by the possibility of sanctions impacting Russian oil exports.

Key Decisions for Investors

• Given the negative global sentiment and the SET's expected neutral open, it may be prudent to hold off on initiating new long positions in Thai equities until the market digests the U.S. inflation data.
• The upcoming U.S. PCE inflation report is the primary market catalyst; investors should anticipate heightened volatility and be prepared to adjust their outlook on interest-rate sensitive assets based on the outcome.
• Monitor for potential sector rotation out of artificial intelligence-related stocks, which were a source of weakness in U.S. markets, while keeping an eye on energy equities as they may show relative strength due to geopolitical supply risks.