Global

World Foreign Direct Investment Down 18%. World foreign direct investment (FDI) dropped by 18% to US$1.35 trillion in 2012 and is expected to stay around that level for 2013 before  gradually increasing on growing investor confidence. The United Nations Conference on Trade and Development (Unctad) believed that global FDI recovery would take longer than expected due mainly to economic fragility and policy uncertainty in major economies. The inter-governmental institution forecast the FDI level to remain close to the 2012 level with an upper range of US$1.45 trillion, a level comparable to the pre-crisis average of 2005 to 2007. (The Star)

Malaysia

Goldman Sachs Downgrades Several Asean Outlooks, Including M'sia.  Several Asean economies' outlooks, including Malaysia's, have been downgraded by Goldman Sachs Group Inc, with economists citing the impact from a slowing Chinese economy as a reason for the gloomier forecast. The economists said in a report that Malaysia's gross domestic product (GDP) had been lowered to 5.1% year-on-year from 5.3% for this year, while 2014's GDP growth had been cut to 5.2% from 5.5%. They have also cut Singapore's GDP growth forecast this year to 2.5% from 3%, pointing to “moderately tighter” financial conditions to the outlook. Thailand's GDP forecast has been lowered to 4.6% from 4.8% this year, while next year's GDP outlook has been cut to 4.7% from 5%. (The Star)

Asia Pacific

Japan Economic Strength Will Show In Stocks, Nishimura Says. Japan’s deputy economy minister said he’s confident the nation’s economic recovery will be seen in share prices after next month’s elections. The Nikkei 225 Stock Average (NKY) hit a high of 15,942.60 on May 23, up more than 80 % from mid-November last year. The benchmark was at 13,135.52 at 10:07 a.m. in Tokyo today. The release of the mid-term fiscal outlook in August should help stabilize bond yields, Nishimura said. The yield on the benchmark 10-year bond was at 0.87 % today, after tripling from a record low of 0.315 % to as high as 1 % since April. (Bloomberg)

Pakistan Plans Talks With IMF On Loan Of Up To $7 Billion. Pakistan said it will discuss a loan program of as much as $7 billion with the International Monetary Fund, as the nation tries to rebuild currency reserves. Pakistan’s foreign-exchange reserves slid over 40 % to $6.24 billion in June from a year earlier, enough to cover about two months of imports, central bank data show. The plunge has weighed on the rupee and adds to other challenges facing the recently elected government of Prime Minister Nawaz Sharif, such as energy shortages and a Taliban insurgency in the northwest. The rupee strengthened 0.1 % to 98.87 per dollar as of 3:01 p.m. local time, climbing for the first time in five days, while the Karachi Stock Exchange 100 index was little changed. (Bloomberg)

Swan Quits Treasury as Friend-Turned-Foe Rudd Back as Leader. Wayne Swan quit as treasurer and deputy prime minister as fallout from the return to leadership of his friend-turned-enemy Kevin Rudd began. Swan, 58, had been treasurer since Rudd’s 2007 victory returned Labor to power after nearly 12 years in opposition, and became deputy prime minister in June 2010, when he backed Julia Gillard’s ousting of Rudd in a backroom party coup. Chris Bowen was named as the new treasurer, just the nation’s third in 17 years, in a statement from the Governor General’s office. (Bloomberg)

USA

US Growth Rate Revised Down To 1.8%. The US economy grew by less than previously estimated in the first quarter of the year, the Commerce Department has said. Gross domestic product - which measures annual economic output - grew at an annualised pace of 1.8%, down from an earlier estimate of a 2.4% rise. Weak business investment, a slowdown in consumer spending and falling exports led to the downward revision. In the final quarter of 2012, the annualised growth rate had been 0.4%. (BBC)

Europe

ECB Policy Makers Say Accommodative Monetary Policy To Stay. European Central Bank policy makers including President Mario Draghi said they’ll maintain a loose monetary stance for as long as needed, while urging euro area governments to cut their deficits and boost investment. Financial markets have tumbled amid concern monetary stimulus will be withdrawn  since U.S. Federal Reserve Chairman Ben S. Bernanke said last week that policy makers may start slowing the pace of bond buying later this year and end it in 2014. (Bloomberg)

EU Resumes Battle Over Imposing Losses At Failing Lenders. European Union finance ministers struggled for consensus as they took up an Irish-drafted compromise proposal for assigning losses at failing banks, extending a deadlock that doomed talks last week. The bloc’s 27 finance chiefs remained “quite far away” from agreement as they convened in Brussels at about 6 p.m. today,Sweden’s Anders Borg told reporters. Talks last week foundered on the question of which creditors face writedowns when banks fail. Some countries, such as France and Sweden, demanded more flexibility for national authorities. Others, such as Germany, sought strict rules across all 27 EU nations. On the table were ways to set thresholds for losses that would need to be assigned before national discretion would be allowed. (Bloomberg)

Bank Of England Warns On Risk From Interest Rate Rises. The Bank of England has warned that "significant" numbers of people could face financial problems when interest rates start to rise again. Paul Tucker, the Bank's deputy governor, has asked regulators to investigate the issue immediately. The Bank's base rate has remained at a record low of 0.5% since March 2009. If rates rose by one percentage point, to 1.5%, the Bank said households accounting for 9% of mortgage debt would need to take action. To afford that sort of rate rise, the Bank said those affected might have to consider earning more money, working longer hours, or cutting essential spending. (BBC)

UK Sugars Austerity Pill With Infrastructure Boost. British finance minister George Osborne unveiled a new round of spending cuts yesterday, but promised to pump some of the savings straight back into the economy to counter charges of excessive austerity. In a speech to Parliament, Osborne spelled out £11.5 billion (RM56.7 billion) in cuts for the 2015/16 fiscal year.  Local government budgets were among those hardest hit, while £3 billion was earmarked for spending on affordable housing projects. Spending on international aid, health and education was protected.  In an effort to stem mounting criticism that continued spending cuts were crimping economic growth, Osborne promised a total of STG300 billion of capital spending between now and the end of the decade, a third of which will be detailed in an announcement today. (Reuters)

Currencies

U.S. Dollar Rises For Sixth Straight Session.  The U.S. dollar rose on Wednesday, with the recent  push higher supported by expectations that the Federal Reserve will slow down monetary stimulus later this year. The euro fell against the dollar, pushing below $1.30 intraday and fetching $1.3004 in recent trade, down from $1.3095 late Tuesday. The ICE dollar index, which measures the U.S. unit against six other major currencies, rose to 82.964 from 82.553 late Tuesday in North America. The ICE dollar index posted its sixth straight session of gains, according to FactSet data. The  dollar was little changed against the Japanese yen on Wednesday afternoon, trading at ¥97.77 compared with ¥97.76 late Tuesday. The dollar fell as low as ¥97.21 intraday, according to FactSet data. The British pound fell to $1.5314 from $1.5430. The Australian dollar exchanged hands at 92.74 U.S. cents in recent trade, higher than 92.65 cents late Tuesday. (Market Watch)

Commodities

Oil Edges Higher On Easing Fed Concerns, Spread Trading. Oil edged higher on Wednesday, shaking off earlier  losses following a large build up in U.S. gasoline inventories, buoyed by gains in the stock market and heavy spread trading. Brent crude for August delivery gained 40 cents to settle at $101.66 a barrel. U.S. crude rose 18 cents to settle at $95.50 a barrel. (Reuters)

Gold Slides 4 Pct, Near 3-Year Low As Wall Street Rallies. Gold tumbled 4% on Wednesday, taking it near a three-year low as a rallying U.S. equity markets further cut into demand for bullion as a hedge against economic uncertainty. Spot gold slumped to its lowest since August 2010 at $1,223.54 an ounce. It was last down 4 % at $1,225.91 an ounce by 3:08 p.m. EDT (1908 GMT). Silver fell to its lowest since August 2010 at $18.39 an ounce. Spot prices were later down 5.2 % at $18.57 an ounce. Among platinum group metals, platinum was down 3.8 % at 1,298.99 an ounce, while palladium slid 4.9 % to $629.97 an ounce. (Reuters)

Source: Kenanga