The Thai stock market traded higher on Thursday, bucking overnight drops on Wall Street as most regional bourses were sanguine following Federal Reserve hints that further tightening is possible, while Treasury Secretary Janet Yellen said there is no plan for "blanket" deposit insurance.
Amid banking turmoil, the US central bank lifted its policy rates by 25 basis points to 4.75-5.0%, the highest level since October 2007.
Traders also digested Fed chairman Jerome Powell's statement that officials "just don't see" cuts this year, with more rate hikes possible if they are needed.
"In a surprise move, the Fed's dot plot chart projected an interest rate of 5.10% at the end of 2023, the same as the December 2022 decision, implying the US is likely to raise rates only one more time -- in May 2023," Rakpong Chaisuparakul, an analyst at KGI Securities, said in a report yesterday.
The Federal Open Markets Committee slightly cut its 2023 GDP growth forecast from 0.5% to 0.4%, while raising core consumer inflation from 3.5% to 3.6%. The growth estimate for 2024 was also trimmed to 1.2% from 1.6%.
Meanwhile, Ms Yellen told lawmakers the government was not considering blanket insurance for bank deposits to stabilise the banking system.
"The comments by Mr Powell and Ms Yellen could be negative to risk assets in the near term, following the recent relief of liquidity facilities from US regulators and the takeover deal of Credit Suisse by UBS," said Mr Rakpong.
Following the comments, the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite tumbled, along with falls in US treasuries and the dollar index.
Treasury two-year yields plunged 23 basis points, while a dollar gauge retreated to its longest losing streak since April 2021.
"As US bond yields and the dollar index stalled, it could prompt fund flows into emerging markets, including Thailand," said an analyst with Yuanta Securities.
Gold prices advanced yesterday as the Fed suggested it was nearing a pause in its rate-hike cycle, making safe haven assets a more attractive bet. Spot gold was up 0.4% to US$1,977 per ounce late afternoon and US gold futures gained 1.5% to $1,978.
Asian stock markets closed mixed with Hong Kong's Hang Seng Index leading gains with a 2.34% increase. The Shenzhen Component Index and Shanghai Composite also closed higher at 0.94% and 0.64%, respectively. Japan's Nikkei 225 slid 0.17%, while the S&P/ASX200 in Australia dropped 0.67%.
The Stock Exchange of Thailand Index closed yesterday at 1,593.65 points, up 0.54%, in trade worth 49.4 billion baht.
