Bangkok: The SET index made a significant recovery, climbing back above the 1,500 points mark after initially opening lower by 36 points due to escalating geopolitical tensions in the Middle East. The Thai stock market faced a sharp decline at the opening, driven by concerns over the tense situation in the region, before managing to regain its footing.
According to Thai News Agency, the SET Index began the day at 1,491.91 points, a decrease of 36.35 points from the previous session. This decline mirrored the downward trend in global stock markets, which were under selling pressure owing to fears of conflict in the Middle East. However, by 11:07 AM, the index had bounced back to 1,507 points, surpassing the 1,500 points threshold once again.
Mr. Apichart Phubanchaikul, CISA, Senior Director of Strategic Analysis at TISCO Securities, shared insights during an interview on the "Investment Minute" program on Channel 9 MCOT HD. He noted that the Thai stock market's decline was consistent with regional markets, which had already experienced a 1-2% drop amid apprehensions about a potential war following US and Israeli actions against Iran. The death of Ayatollah Ali Khamenei, Iran's Supreme Leader, has heightened market sensitivity, with attention focused on the responses of major powers such as China and Russia, Iran's close allies. Nevertheless, Mr. Apichart expressed that the chances of a widespread regional conflict seem limited.
The market is currently experiencing a risk-off environment, with investors shifting capital into gold and oil amid fears of possible oil supply disruptions. Historical data from previous geopolitical tensions indicate that market reactions have been relatively moderate, with an average decline of about 3%, followed by a recovery within 1-2 weeks. This suggests that investors are becoming more resilient to geopolitical risks.
Gold prices are anticipated to follow a zigzag upward trend, potentially testing the previous high of $5,600 per ounce. Meanwhile, oil prices could increase by an additional $5-10 per barrel, benefiting energy stocks, particularly PTTEP.
Poon Panichpibul, a money and capital market strategist at Krungthai Global Markets, Krungthai Bank, reported that the Thai baht opened at 31.24 baht per dollar, depreciating from last week's closing rate of 31.09 baht per dollar. The ongoing Middle East conflict is under close scrutiny due to its potential impact on global energy prices. A rise in crude oil prices to $80-100 per barrel could exert short-term pressure on the Thai economy, especially if Iran closes the Strait of Hormuz.
Additionally, markets are evaluating the US Federal Reserve's (FED) interest rate policy outlook, with a 42% probability of three interest rate cuts this year. Key US economic data and corporate earnings reports are also being closely monitored, while the Thai baht is expected to trade between 31.00-31.75 baht per dollar this week.