Asia Pacific Mixed Markets; Thailand election results in focus as baht strengthens

The Thai baht rallied on Monday, strengthening 0.6% to 33.73 against the US dollar as Thailand’s opposition parties look set to be the biggest winners in Sunday’s general election.

The baht hovered at its strongest levels since February earlier this year when it traded below the 33.5 threshold.

The currency saw its latest weakest point in October last year as the US central bank continued its tightening cycle to above 38.3 against the dollar, the weakest the Thai currency has been since August 2006, Refinitiv data showed.

The Thai currency offset weakness seen across the forex market among Asian currencies on Monday, with Japanese yen the weakening by 0.06% to 135.79 against the US dollar and onshore Chinese yuan comparatively flat.

Citi economist Nalin Chutchotitham said Thailand’s medium-term economic outlook “may see heightened risks to populist economic policies that could raise questions about future fiscal discipline,” she wrote in a Sunday note.

— Jihye Lee

South Korea’s trade deficit decreased for a fourth month in a row to a revised figure of $2.65 billion in April, a Monday release showed, slightly higher than the preliminary figure of $2.62 billion released earlier this month.

The latest reading follows a deficit of $4.74 billion seen in March and marks the 14th consecutive month of the country’s trade balance remaining in deficit territory, where imports exceed the amount of exports.

The revised figure was also lower than the $2.89 billion deficit expected by economists polled by Reuters.

April’s exports totaled $49.58 billion, down 14.3% from April last year, while imports totaled $52.23 billion, down 13.3% from last year.

Trade in the first 10 days of May also indicated that exports fell by 10.1% while imports also fell by 5.7%, a separate release from Thursday showed.

— Lim Hui Jie

The release of economic data and a Group of Seven summit in Japan will be the highlights of this week’s events in the Asia-Pacific region.

On Monday, Thailand’s gross domestic product for the first quarter will be released in the morning. Economists at Goldman Sachs expect the economy to grow 1.8% quarter-on-quarter as consumption picks up and inventories recover amid slower factory activity.

China releases a series of economic data on Tuesday: Industrial production, retail sales, growth in fixed asset investment and unemployment. Compared to a low base seen in April a year ago, market watchers largely expect the economic indicators to reflect a recovery in growth.

Economists polled by Reuters forecast industrial production to grow 10.1% year-on-year in April after 3.9% growth the month before. They also see retail sales rising 20.1% for the month after the economy saw a 10.6% jump in March.

Australia’s central bank minutes as well as its wage price index for the first quarter are released on Wednesday and Thursday, respectively.

New Zealand will unveil its annual budget for the year on Thursday, with its finance minister describing it as focusing on returning to “a more sustainable fiscal position”.

The Philippine central bank is set to meet and is expected to keep its policy rate unchanged at 6.25% on Thursday, especially after the economy saw a slight easing in inflationary pressures earlier this month.

If the central bank pauses its rate hike cycle, it would be the first since March 2022.

— Jihye Lee

European bank stocks are poised to outperform carmakers for the foreseeable future, according to UBS.

The investment bank highlighted three structural changes that could lead to significant gains for banking stocks compared to their auto peers, despite similarities in their economic cycles.

CNBC Pro subscribers can read more about these three reasons here.

— Ganesh Rao

Bank of America strategists have named the ten European stocks they believe are currently undervalued and could provide significant investment returns.

These selections, which the investment bank refers to as the “Beat Factor Top 10,” consist primarily of industrial and financial companies.

One of the stocks offers more than 60% upside over the next 12 months, according to the investment bank.

CNBC Pro subscribers can read more here.

— Ganesh Rao

Seventeen stocks in the S&P 500 hit new highs on Friday, with many trading at record highs. Food companies were among the names that drew attention.

New S&P 500 52-Week High:

• O’Reilly Auto traded at record highs dating back to its IPO in April 1993
• PulteGroup traded at record levels dating back to the IPO in 1972
• General Mills trading at record levels dating back to when it began trading on the NYSE in 1928
• PepsiCo traded at record highs dating back to Pepsi-Cola’s 1965 merger with Frito-Lay to form Pepsico
• First Solar trading at levels not seen since September 2008

Meanwhile, there were 11 stocks that hit 52-week lows:

• Match group trading at all-time lows dating back to its IPO in November 2015
• Organon trading at all-time lows dating back to its June 2021 spin-off from Merck

— Chris Hayes, Sarah Min

Consumers became more pessimistic in May as persistently high inflation and problems in the banking sector weighed on sentiment.

The University of Michigan’s Survey of Consumers showed a reading of 57.7 for the month, down from 63.5 in April and below the Dow Jones consensus estimate of 63.

Inflation expectations one year from now fell to 4.5% but the five-year outlook rose to 3.2%, the highest since June 2008.

-Jeff Cox

Bitcoin is on track to end the week down 10.6%, which would make it its worst week since November 11, the days after the FTX collapse, according to Coin Metrics.

It last traded down more than 1% at $26,416.31. Earlier it touched a low of %26,138.19, its lowest level since March 17. The crypto asset has been sliding all week as investors weighed a host of negative developments, including:

• A false alarm suggesting the US government’s move of bitcoin for potential sale triggered a wave of long liquidations;
• Network congestion and higher chargeswhich led Binance to pause bitcoin withdrawals;
• Marketers Jump and Jane Street announce one reduction of their US crypto businesspressured by the regulatory crackdown and adding to the existing liquidity problem in crypto,
• Uncertainties surrounding the US debt ceiling and the Federal Reserve’s policy.

Bitcoin has closed lower or less than 1% higher over the past six days. That in itself could weigh on sentiment, said Yuya Hasegawa, a crypto market analyst at Japanese bitcoin exchange Bitbank.

— Tanaya Machel

More interest rate hikes may be needed if economic data do not show more convincing signs that inflation is on the way down, Federal Reserve Governor Michelle Bowman said on Friday.

“If inflation remains high and the labor market remains tight, further monetary policy tightening is likely to be appropriate to achieve a sufficiently restrictive stance of monetary policy to lower inflation over time,” Bowman said in prepared remarks for a speech in Frankfurt, Germany.

Although the consumer and producer price index this week showed that the annual rate of inflation cooled slightly in April, the central bank official said those numbers, combined with last week’s nonfarm payrolls report, “have not provided consistent evidence that inflation is on a downward path.”

-Jeff Cox