Anticipated Cessation of Downward Spiral in Thai Stock Exchange
Trading on the Stock Exchange of Thailand took a dive, plunging more than 2.2% over three consecutive sessions, leaving the index barely holding onto the 1,115-point plateau. Despite the tumultuous market, a glimmer of optimism emerges on the global stage, with hopes of a ceasefire between Israel and Iran potentially remapping the Asian stocks scenario.
Typically, Asian markets tend to follow in the footsteps of their European and U.S. counterparts. Given the upward trajectory in the European and U.S. markets, there's a good chance Asian bourses will follow suit.
On Monday, the SET nosedived following losses from various sectors like food, finance, consumer goods, industry, property, and services. The index closed at 1,114.49, having slipped 0.73% for the day.
Significant declines were observed in several blue-chip stocks. Advanced Info fell by 0.70%, Thailand Airport plummeted 8.40%, Bangkok Dusit Medical saw a marginal increase of 0.48%, while Bangkok Expressway, B. Grimm, BTS Group, Charoen Pokphand Foods, Energy Absolute, Gulf, Krung Thai Bank, PTT Oil & Retail, PTT Exploration and Production, PTT Global Chemical, SCG Packaging, Siam Commercial Bank, Siam Concrete, Thai Oil, True Corporation, TTB Bank, and Bangkok Bank, Kasikornbank, Krung Thai Card, PTT, and CP All Public remained unchanged.
Meanwhile, on Wall Street, the Dow, NASDAQ, and S&P 500 all rallied, with the Dow and NASDAQ recording gains of 0.75% and 1.52%, respectively. The uptick in U.S. markets was driven by traders looking to snap up stocks at reduced prices following the previous session's steep drop, fueled by Israel's airstrikes on Iran.
Traders are also keeping a watchful eye on the upcoming G7 summit and the Federal Reserve's latest monetary policy announcement, both of which could impact the markets in the coming days. While a rate hike is not expected, the accompanying statement and Fed officials' latest projections may provide clarity about the outlook for interest rates.
In the global context, the ongoing conflict between Israel and Iran continues to escalate, with Israeli strikes targeting Iran's military infrastructure and Iran signaling its readiness to end its hostility with Israel. If this ceasefire indeed materializes, Asian markets may respond positively due to reduced geopolitical risk, especially in energy markets. Energy-importing countries would likely see relief in crude oil prices, benefiting industries relying on stable energy costs.
On the flip side, defense and security stocks might experience a shift depending on regional tensions. Reduced conflict could lower immediate demand but boost investor confidence, while improved stability may revitalize trade flows and infrastructure investments across Asia. However, it's essential to emphasize that any positive forecast for Asian markets is speculative until concrete steps toward peace or de-escalation become evident.
Investors should closely monitor developments in the Middle East conflict, particularly changes that directly impact energy prices and regional geopolitical stability, before making any decisive investment moves in the Asian markets.
Businesses and industries in Asia might find remedies in the potential ceasefire between Israel and Iran, as a resolution could nudge down energy prices and alleviate geopolitical risks. This optimistic scenario could particularly benefit energy-importing sectors in Asia, as they would profit from stable energy costs. Conversely, the defense and security industries may witness a fluctuation depending on the regional tensions.
