The Thai stock market on Tuesday wrote a finish to the modest two-day winning streak in which it collected more than 16 points or 3.5 percent ahead of Monday's holiday in observance of Chakri Day. The Stock Exchange of Thailand is clinging to support at 440 points, but investors are bracing for another day of decline on Wednesday.
The global forecast for the Asian markets is broadly pessimistic, since the start of the corporate earning season was as bad as expected. Some other weak economic and corporate news added to the negative sentiment, which dragged the European and U.S. markets sharply lower - and the Asian markets are on track to follow that lead.
The SET finished modestly lower on Tuesday, dragged lower by weakness among the energy stocks. For the day, the index dropped 3.48 points or 0.78 percent to close at 442.56 after trading between 441.50 and 449.68. Volume was 2.196 billion shares worth 13.353 billion baht.
Among the actives, energy giant PTT was down 1.23 percent, while subsidiary PTT Exploration and Production was off 3.02 percent, Kasikornbank added 2.56 percent and Siam City Bank jumped 9 percent.
The lead from Wall Street is sharply negative as stocks saw some further downside during trading on Tuesday after ending the previous session mostly lower. The major averages all ended the day firmly in negative territory, pulling back further off their recent highs, as traders continued to do some profit taking. The continued weakness in the markets came as traders expressed some anxiety about the upcoming earning season and stocks' ability to sustain the recent upward move in light of expectations of weak quarterly results.
After the bell, aluminum producer Alcoa Inc. reported a net loss for the first quarter, hurt by the impact of the economic downturn on its core industrial and commercial markets as well as an historic decline in aluminum prices. The company's quarterly loss per share also came in worse that what analysts had predicted. The company reported a net loss for the first quarter of $497 million or $0.61 per share, compared to net income of $303 million or $0.37 per share for the year-ago quarter.
This marks the second straight quarterly net loss for Alcoa, which reported a net loss of $1.2 billion or $1.49 per share for the fourth quarter in January. However, with most companies expected to report disappointing first quarter results due to the weakness in the economy, the guidance provided by the companies is likely to have a more significant impact on the markets.
Some selling pressure was also generated by a report from the Times of London, which said that new forecasts from the International Monetary Fund are expected to suggest that toxic debts racked up by banks and insurers could spiral to $4 trillion.
In other corporate news, Royal Bank of Scotland (RBS) announced that it has begun consulting Unite and other employee representatives about a business plan for its back office operations that will involve job losses. The bank said that the plan could affect up to 9,000 jobs over the next two years, including 4,500 in the U.K. However, the actual number of jobs lost is expected to be significantly lower.
The major averages all posted steep losses on the day, with the Dow closing down 186.29 points or 2.3 percent at 7,789.56, while the Nasdaq closed down 45.10 points or 2.8 percent at 1,561.61 and the S&P 500 closed down 19.93 points or 2.4 percent at 815.55.
In economic news, the central bank of Thailand is scheduled on Wednesday to announce its decision on interest rates. Analysts are expecting the bank to lower rates by 50 basis points, to 1 percent from the current 1.50 percent.
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