Asia-Pacific markets mixed; Thailand election results in focus as baht strengthens

The Thai baht rallied on Monday, strengthening 0.6% to 33.73 against the U.S. 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 was trading below the 33.5 threshold.

The currency saw its recent weakest point in October last year as the U.S. Federal Reserve continued its tightening cycle to above 38.3 against the greenback, the weakest the Thai currency had been since August 2006, Refinitiv data showed.

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

Citi economist Nalin Chutchotitham said Thailand’s medium-term economic outlook “could see increased risks of populist economic policies which could raise questions on future fiscal discipline,” she wrote in a Sunday note.

— Jihye Lee

South Korea trade deficit narrowed for a fourth straight month 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 straight month of the nation’s trade balance remaining deficit territory, in which 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 came in at $49.58 billion, a 14.3% decline compared to April last year, while imports stood at $52.23 billion, down 13.3% year-on-year.

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

— Lim Hui Jie

Economic data releases and a Group of Seven summit in Japan will be the highlights of this week’s events in the Asia-Pacific.

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 post a 1.8% quarter-on-quarter growth as consumption picks up and inventories rebound amid slower factory activity.

China releases a slew of economic data on Tuesday: Industrial production, retail sales, fixed asset investment growth as well as unemployment rate. Compared to a low base seen in April a year ago, market watchers are largely expecting the economic indicators to reflect a rebound in growth.

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

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

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

Philippines’ central bank will meet and is widely expected keep its policy interest rate unchanged at 6.25% on Thursday, especially after the economy saw slight softening in its inflation print earlier this month.

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

— Jihye Lee

European banking stocks are poised to outperform automakers in the foreseeable future, according to UBS.

The investment bank highlighted three structural changes that could drive significant gains for banking stocks over their automotive counterparts, despite similarities in their economic cycles.

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

— Ganesh Rao

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

These picks, which the investment bank refers to as the “Beat Factor Top 10,” are primarily made up 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 reached fresh highs on Friday, with many trading at all-time highs. Food companies were among the notable names.

New S&P 500 52-week highs:

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

Meanwhile, there were 11 stocks reaching 52-week lows:

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

— Chris Hayes, Sarah Min

Consumers grew more pessimistic in May as persistently high inflation and troubles in the banking industry 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 for a year from now edged lower to 4.5% but rose on the five-year outlook to 3.2%, tied for the highest since June 2008.

—Jeff Cox

Bitcoin is on pace to finish the week down 10.6%, which would make it its worst week since Nov. 11, in the days following the FTX collapse, according to Coin Metrics.

It was last trading down more than 1% at $26,416.31. Earlier, it hit 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 U.S. government’s movement of bitcoin for potential sale, which triggered a wave of long liquidations;
• Network congestion and higher fees, which led Binance to pause bitcoin withdrawals;
• Market makers Jump and Jane Street announcing a reduction in their U.S. crypto operations, pressured by the regulatory crackdown and adding to the existing liquidity problem in crypto,
• Uncertainties surrounding the U.S. debt ceiling and Federal Reserve policy.

Bitcoin has finished lower or less than 1% higher for the last six days. That itself could weigh on the mood, said Yuya Hasegawa, a crypto market analyst at Japanese bitcoin exchange Bitbank.

— Tanaya Macheel

More interest rate increases may be needed if economic data doesn’t show more convincing signs that inflation is coming down, Federal Reserve Governor Michelle Bowman said Friday.

“Should inflation remain high and the labor market remain tight, additional monetary policy tightening will likely be appropriate to attain a sufficiently restrictive stance of monetary policy to lower inflation over time,” Bowman said in prepared remarks for a speech delivered in Frankfurt, Germany.

Even though consumer and producer price indexes this week showed that the annual pace 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