SET dives to 3-week low over concerns on US inflation, Covid outbreak in China 

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Thai stocks fell to a three-week low on Monday as concerns of further monetary tightening grew after the United States reported a record-high inflation in May, while a comeback in China’s Covid-19 cases also dragged investors’ sentiment.

The Stock Exchange of Thailand (SET) index slumped by 24 points, down 1.5 per cent, to 1,607.91 during  the morning session. The drop was slightly smaller compared to other regional markets.

Global equity markets have come under pressure after the US inflation rate hit a 40-year high in May, soaring 8.6 per cent year-on-year. Economists project that the Federal Reserve will raise the interest rate by at least 50 basis points this week. 

The Fed has lifted its key rate twice, once by 25 basis points in March and then by 50 basis points in May.

“The SET is expected to head down again on mounting US recession fears,” analysts at Krungsri Securities said in a research note. On Friday the SET index dropped by 9 points at the closing. 

Refineries were among the top losers on Monday as investors anticipated government directives to curb refinery rates amid rising fuel costs. Thai Oil Plc (TOP) lost 7 per cent to 53 baht, while Banchak Corporation Plc (BCP) dropped 6.6 per cent to 32 baht.

Meanwhile, insurance firms outperformed the market, with Dhipaya Group Holding Plc (TIPH) and Bangkok Life Assurance Plc (BLA) rising 4.6 per cent to 68 baht and 3.7 per cent  to 42.25 baht, respectively.

Analysts at Krungsri also warned that the resurgence of Covid-19 instances in China may add another roadblock to the stock market, as local authorities began mass testing last week to limit the virus’s spread in a nightlife area.

“The partial lockdown in Shanghai could put more pressure on the market,” Krungsri added.

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