The Thai stock market has finished higher now in four straight sessions, collecting more than 15 points or 4 percent in the process. The Stock Exchange of Thailand is closing on resistance at 440 points, and now analysts suggest that the market will challenge that level at the opening trade on Tuesday.
The Asian markets draw a sharply positive global forecast, with major gains expected from the financial sector that has been so oversold in recent months - thanks to details on the U.S. plan to remove toxic assets. Some better than expected economic data out of the U.S. adds to the positive sentiment. The European markets finished sharply higher, as did the U.S. markets, and the Asian bourses are forecast to follow that lead.
The SET finished sharply higher on Monday, lifted by gains among the financials and the energy stocks. For the day, the index jumped 8.53 points or 1.99 percent to close at 438.17 after trading between 432.15 and 440.09. Volume was 2.322 billion shares worth 15.333 billion baht.
Among the gainers, energy giant PTT surged 5.96 percent, while subsidiary PTT Exploration and Production added 0.51 percent, coal producer Banpu jumped 5.66 percent, Siam Commercial Bank gained 1.85 percent, Kasikornbank was up 2.87 percent and Bangkok Bank was up 1.3 percent.
The lead from Wall Street is broadly positive as stocks moved sharply higher over the course of the trading day on Monday, with the major averages more than offsetting the losses posted in the two previous sessions to reach their best levels in over a month. The standout gains came after the Obama administration revealed its plan to help banks sell toxic assets.
The plan unveiled by Treasury Secretary Timothy Geithner will set up an investment fund to buy mortgage-related securities and other assets that are hurting the balance sheets of banks. The new Public Private Investment Program would combine taxpayer money with private funds, aiming to buy loans and free up banks to renew lending.
Geithner's plan involves using up to $100 billion in funds from the $700 billion financial rescue plan passed in 2008 in addition to capital from private investors to generate an estimated $500 billion to purchase the toxic assets, a number that could double to $1 trillion over time.
In economic news, existing home sales unexpectedly rose in the month of February, according to a report released by the National Association of Realtors, with sales rebounding after hitting a twelve-year low in the previous month. The report showed that existing home sales rose 5.1 percent to a seasonally adjusted annual rate of 4.72 million units in February from a pace of 4.49 million units in January. Economists had expected sales to slip to a 4.45 million unit rate.
Some of the strength on the day also came as investors reacted to Canadian integrated oil and natural gas companies Suncor Energy (SU) and Petro-Canada (PCZ) jointly announcing that the companies have agreed to merge in an all-stock deal. Furthermore, Walgreen (WAG) reported second quarter earnings that fell year-over-year but still pleased investors. Comparable stores sales increased 1.3 percent in the quarter, while comparable store front-end sales decreased 1.2 percent.
The major averages accelerated to the upside going into the close, ending the session at or near their best levels of the day. The Dow closed up 497.48 points or 6.8 percent at 7,775.86, the Nasdaq closed up 98.50 points or 6.8 percent at 1,555.77 and the S&P 500 closed up 54.38 points or 7.1 percent at 822.92.
In economic news, Thailand's economy could contract 3 percent this year, Finance Minister Korn Chatikavanij warned on Monday. The minister said the economy may shrink 8 to 9 percent this year if the government does nothing and the number of unemployed may increase to 2 million.
Korn said the situation has changed and the Thai economy is not in good shape. In 2008, the economy grew 2.6 percent, down from 4.9 percent recorded in 2007. The country's state planning agency forecast 2009 economic growth to be in a range of 0 to minus-1 percent.
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