Malaysia

Industrial Production In March Expanded By 4.3% YoY, after gaining 6.7% in February. This is also below market expectations of 4.5%. Based on the 3-month moving average (3mma), production grew by 4.8%. On a monthly comparison however, production increased by 10.4% MoM after two consecutive months of contraction. For the whole of the 1Q14, industrial production expanded by 4.8% YoY, stronger than the previous quarter’s 2.9% and last year’s 1Q13 decline of 0.1%. (Please refer to Economic Viewpoint for further comments)

Malaysia Says It’s On Track To Achieve High-Income Nation Status. The Malaysian government said it’s on track to achieve a goal of becoming a high-income nation by 2020 as the country enters the mid-point of a 10-year program to transform the economy and reduce reliance on oil revenues. Gross national income per capita in Southeast Asia’s third largest economy rose to $10,060 last year, the government said in the 2013 annual report for its so-called Economic Transformation Program released yesterday. That compares with a previously reported $9,970 in 2012, and the target of $15,000 by 2020. The country received 161.1 billion ringgit ($50 billion) of private investments last year, it said. Prime Minister Najib Razak is dismantling decades of subsidies to address fiscal risks identified by Fitch Ratings, which cut Malaysia’s credit outlook in July. (Bloomberg)

Asia Pacific

China Manufacturing Growth Slows In April. China has released weaker-than-expected manufacturing data, reinforcing concerns the world's second-largest economy is losing steam. Industrial output rose by 8.7% in April from a year earlier, compared with estimates for an 8.9% increase. Retail sales and fixed-asset investment spending also came in below forecasts. The figures add to speculation the Chinese government may miss its 2014 growth target of 7.5% given they are undertaking key economic reforms. China's National Bureau of Statistics said retail sales increased by 11.9% in April, which was below estimates for a 12.2% rise. Fixed-asset investment, which is an indicator of government spending on infrastructure, rose 17.3% in the January-to-April period, versus estimates for growth of 17.7%. (BBC)

Faster India Inflation Before Election Result Adds Rate Pressure. India’s retail inflation accelerated by the fastest pace in three months while factory output declined, adding pressure on the central bank to keep rates elevated after national elections finish. The consumer-price index rose 8.59 % from a year earlier, compared with 8.31 % in March, the Central Statistics Office said in New Delhi yesterday. The median of 39 estimates in a Bloomberg survey predicted an 8.5 % rise. Industrial production shrank 0.5 % in March, a separate report showed, compared with an estimated 1.5 % drop. (Bloomberg)

Abbott Plots Path To Surplus With Australian Spending Cuts. Australia will cut spending on foreign aid, welfare and the public service and impose a tax on the highest paid as Prime Minister Tony Abbott uses his first budget to downsize government and set a path to surplus. Treasury forecast a A$29.8 billion ($27.9 billion) deficit for the 12 months through June 2015, down from A$49.9 billion this fiscal year, with shortfalls narrowing in the following three years, budget papers released in Canberra show. It announced a A$11.6 billion infrastructure package to help a shift from mining-led growth, and will start a A$20 billion medical research fund. (Bloomberg)

USA

US Retail Sales Growth In April Weaker Than Forecast. US retail sales grew by just 0.1% in April, compared with growth of 1.5% the month before, latest figures from the Commerce Department show. Consumers cut back primarily on purchases of electronics and furniture. The slowdown surprised many analysts, who were looking for continued growth after the harsh winter hit spending. The weak figure may cause concern, as consumer spending accounts for about two-thirds of total economic activity in the US. Excluding sales of petrol and cars, retail sales actually fell by 0.1% in April. (BBC)

Small-Business Owners Still Cautious, Banking Surveys Find. Small-business owners are keeping a cautious approach to running their companies even as they grow more optimistic. Surveys released Tuesday by Wells Fargo and Bank of America found many owners still have conservative hiring plans and little appetite for loans. Stronger revenue and cash flow are behind the optimism. In the Bank ofAmerica survey, 68 % of owners said they expect revenue to increase in the next 12 months. Wells Fargo's second-quarter Small Business Index is up to 47 from the first quarter's 45, its highest level since before the 2008 financial meltdown. (AP)

Europe

German Investor Confidence Drops For Fifth Straight Month. German investor confidence fell for a fifth month in May in a sign of growing concern that threats from low inflation to a strong euro may undermine the recovery. The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict economic developments six months in advance, slid to 33.1 from 43.2 in April. The gauge is at the lowest level since January 2013. Economists forecast a decline to 40, according to the median of 33 estimates in a Bloomberg News survey. The index has dropped every month since reaching a seven-year high of 62 in December. (Bloomberg)

Currencies

Euro Falls To More-Than Five-Week Low. The dollar rose against the euro Tuesday after a survey showed German investor confidence slumped in May and reports indicated Germany’s central bank would back further stimulus from the European Central Bank in June, if needed to fight low inflation. The euro fell to $1.3703 from $1.3758 late Monday, trading at levels last seen on April 4, according to FactSet. The ICE dollar index, which measures the greenback against six rivals, rose to 80.118 from 79.890 late Monday. The dollar moved up to ¥102.26 from ¥102.13 late Monday. In other action, the British pound fell to $1.6829 from $1.6869 late Monday. The Australian dollar was at 93.56 U.S. cents versus 93.61 U.S. cents. (Market Watch)

Commodities

U.S. Crude, Brent Hit Two-Week Highs On Perceived Stocks Draw. U.S. crude oil rose by more than $1 a barrel to two week highs on Tuesday as traders expected weekly government inventory reports to show stockpiles at the Cushing, Oklahoma, delivery point plunged to new record lows last week. U.S. crude settled $1.11 higher at $101.70 a barrel, its highest settlement since April 29. Brent crude for June delivery also hit a two-week high as it settled up 83 cents at $109.24 a barrel. The June contract expires on Thursday. (Reuters)

Platinum, Palladium Rise On Supply Fears; Gold Eases. Platinum and palladium each rose 1 % on Tuesday on the back of lingering supply worries as South Africa sent more police to the strike-hit platinum belt to protect miners after four were killed returning to work over the weekend. Spot platinum climbed 1.1 % to $1,448.25 an ounce by 3:26 p.m. EDT (1926 GMT) and palladium rose 1.2 % to $812.40 an ounce. Spot gold dipped 0.1 % to $1,293.70 an ounce, while U.S. COMEX gold futures for June delivery settled down $1 at $1,294.80. Among other precious metals, silver inched down 0.1% to $19.49 an ounce. (Reuters)