Asian stocks surge as us debt default averted

Asian stocks experienced gains on Friday, following the US Senate’s approval of legislation that prevents a US debt default. The possibility of the US Federal Reserve deciding against raising interest rates this month also contributed to the positive sentiment.

Last week, Thai shares fluctuated between 1,521.31 and 1,545.55 points, eventually closing at 1,531.20 on Friday, marking a 0.024% increase from the previous week. The average daily trading value stood at 49.18 billion baht. Retail investors emerged as net buyers, purchasing 6.17 billion baht worth of shares, while foreign investors were net sellers, offloading 9.22 billion baht in shares.

The US debt ceiling suspension, which amounts to US$31.4 trillion, has ended weeks of political tension and averted a potential first-time default. Some Federal Reserve officials reportedly support a pause in interest rate hikes during their June 13-14 meeting. The FedWatch Tool indicates a 70.4% probability of the Fed maintaining its key rate at 5.00% to 5.25%, with a 29.6% probability of a further 25-basis-point increase.

In May, foreign investors’ sales of Chinese shares accelerated due to weak domestic demand and expectations of poor earnings. This led to significant declines in the mainland and Hong Kong stock markets. Chinese factory activity remained weak, with the purchasing managers’ index dropping to 48.8 in May from 49.2 in April, highlighting the economy’s fragile recovery from the pandemic.

Eurozone inflation in May was lower than anticipated, supporting the European Central Bank’s case for a less aggressive approach to interest rates. Inflation in the 20 euro-sharing nations decreased to 6.1% in May from 7.0% in April.

Meanwhile, foreign investors continued to acquire Japanese shares, with a net buying of 381.6 billion yen (US$2.75 billion) in the fourth week of May. The Nikkei index maintained its 33-year high levels. Toyota Motor announced plans to invest an additional US$2.1 billion in its new US battery plant in North Carolina, reflecting the Japanese automaker’s efforts to capitalise on the growing demand for electric vehicles.

Daikin revealed plans for 800 billion yen (US$5.7 billion) in capital investments over the next three years, as the Japanese conglomerate aims to profit from the demand for energy-efficient heating in Europe and India’s expanding air conditioner market.

The International Energy Agency stated this week that renewable energy capacity worldwide is expected to surpass 4,500 gigawatts in 2024, roughly equal to that of fossil fuels.

Indonesian copper miner Amman Mineral International aims to raise 12.94 trillion rupiahs (US$880 million) in an initial public offering scheduled for June 28 to July 3.

For India, its gross domestic product increased from 4.5% in the last quarter to 6.1% in the January-March period. Meanwhile, Vietnam plans to reduce its rice exports to 4 million tonnes a year by 2023 from 7.1 million tonnes last year as it wants to export higher quality products and also secure domestic food sources, reported Bangkok Post.