The Thai bourse plunged yesterday, in line with global stock and cryptocurrency markets, as investors worried the Federal Reserve may implement more aggressive rate hikes to tackle runaway inflation.
The US consumer price index (CPI) increased 8.3% from a year ago in April, exceeding analysts' estimates for an 8.1% gain, while the US core CPI, which excludes food and energy prices, rose 6.2%, also exceeding forecasts of 6.0%.
Sharp rises in consumer prices led investors to believe the Fed might move forward with faster and higher rate hikes, from 0.5 to 0.75 percentage points, at its next meeting in June.
Fears of more aggressive rate hikes drove investors to flee from risky assets such as global equities and cryptocurrencies to safe-haven assets such as the US dollar.
Asian equities opened lower yesterday in line with the Dow Jones average.
The Nikkei 225 opened at 25,945.04, down 268.6 points or 1.02%, while the Hang Seng Index opened at 19,556.89 points, down 267.68 points or 1.35%.
The SET Index fell below 1,600 to 1,587.79 points as of 12.30pm yesterday, down 25.55 points or 1.58%, in trade worth 47.9 billion baht.
The SET Index closed at 1,584.52 points yesterday, down 1.79%, in trade worth 92.5 billion baht.
According to Coingecko.com, as of 12.25pm yesterday the global cryptocurrency market dropped to US$1.23 trillion in value, down 17% from the day before.
The Bitcoin price fell below the key support level of $30,000 to 27,494.14, down 13.2% from the day before and 30.6% from the week before, while the Ethereum price was $1,855.53, down 22.2% from the day before and 37% from the week before.
Analysts warn the Bitcoin price could test $25,000 after dropping below $30,000.
"The cryptocurrency market dropped sharply after the US revealed higher than expected inflation. This led investors to worry the Fed could speed up interest rate hikes," said Prakit Siriwattanaket, managing director of Merchant Partners Asset Management.
In addition to inflation, market sentiment was pressured by surging bond yields, with 10-year US Treasury bonds, the benchmark for global bond prices, rising above 3% overnight.
This will cause companies to face higher costs for debt payments, leading them to reduce their investments and dividend payments to investors, Mr Prakit said.
Kitpon Praipaisarnkit, vice-president at UOB Kay Hian Securities, said the SET Index fell on concerns about US inflation and forced selling of stocks purchased on margin loans as investors were unable to secure more securities and fulfil margin requirements in time.
TerraUSD (UST), the crypto coin that has its value tied to the US dollar, also saw a slump following the news, causing Terra Luna, which supports UST's value, to plummet and spur panic selling in the crypto market.
However, Mr Kitpon said the stock market will not suffer the same fate as the crypto market because the former has quite a lot of institutional investors, unlike the crypto market. Most crypto traders are small, individual investors, so panic selling can easily occur when prices drop, he said.
