The Stock Exchange of Thailand (SET) and most Asian bourses sagged yesterday, tracking overnight declines on Wall Street, as the Federal Reserve reiterated that US interest rates next year will be higher than previous market estimates, raising fears of a recession.
Sentiment on the Thai bourse, which was down about 0.8% in the afternoon session yesterday, toned down after news emerged in the early morning that Princess Bajrakitiyabha passed out due to heart problems while running.
Hong Kong's Hang Seng Index tumbled 1.13%, while South Korea's Kospi sank 1.32% and mainland Chinese blue chips declined 0.15%.
Japan's Nikkei 225 dipped 0.37%, while Australia's stock benchmark fell 0.64%.
MSCI's broadest index of Asia-Pacific shares slumped 0.94% after climbing to 160.37 in the previous session for the first time since late August.
Overnight the US S&P 500 Index lost 0.61% after the Federal Open Market Committee raised its benchmark rate by 50 basis points to a 4.25% to 4.5% target range, the highest level in 15 years.
In his remarks, Fed chair Jerome Powell said the central bank would deliver more rate increases next year even if the economy slips towards a possible recession, arguing that higher costs would occur if the US central bank does not get a firmer grip on inflation.
The central bank had a "ways to go" in its campaign to rein in inflation, he said.
Policymakers projected rates would end next year at 5.1%, exceeding previous estimates and well above market projections, Mr Powell told reporters Wednesday.
"US interest rates should have a limited upside in 2023. The Bank of England and the European Central Bank are projected to raise their interest rates by 0.5% today as well," said Therdsak Thaveeteeratham, senior analyst at Asia Plus Securities.
Mr Powell insists the Fed will continue to hike interest rates to bring inflation down to its target of 2%.
Currencies in the US dollar index basket are stabilising, resulting in lower forex risk, encouraging investors to switch to assets with lower risk and boosting fund inflow in the SET, Mr Therdsak wrote in a research paper yesterday.
Thailand has a lower recession risk than other countries as 2023 GDP is projected to see stronger growth than developed countries.
The SET may outperform other markets, driving foreign fund inflow, as foreign holdings of Thai stocks is low at only 22.3%, he said.
