Malaysia

- Manufacturers Upbeat On Business Conditions In 2H: FMM. Malaysia’s business environment is expected to gather momentum in the second half of the year, gauging from the expectations among manufacturers. According to Federation of Malaysian Manufacturers (FMM) president Datuk Saw Choo Boon, about 35 per cent of the survey respondents anticipate business activitivity to pick up in the next six months, up from 28 per cent who believed t so in second half of 2013. The latest FMM-MIER (Malaysian Institute of Economic Research) Business Conditions Index saw the index in the second half of 2014 rose to 117 from 106 in same period in 2013. "Of the expected indices, the local sales, exports sales and production volume posted the largest gains this time compared to second half of 2013, with readings of 111, 122, 127, respectively. Capital investment and cost of production, on the other hand, adjusted lower to 123 and 154 respectively," Saw told a news conference on FMM-MIER Business Conditions Survey for the first half of 2014, yesterday. (NST)

- Unemployment Rate In April Down 0.1ppt To 2.9%. The country’s unemployment rate stood at 2.9 % in April 2014, down 0.1 percentage point from the 3% registered in the previous month, thanks to an increase of 161,200 people employed in manufacturing, the Department of Statistics Malaysia said. Year-on-year, the unemployment rate was also lower by 0.1 percentage point from the 3% of April 2013. The seasonally adjusted, month-on-month unemployment rate was similarly at 2.9%, while year-on-year it was 3.1% compared to 3.3% in April 2013. Meanwhile, labour force participation rate was up at 67.3% in April 2014, from 66.9% in the month before. According to the statistics department, the increase of 0.4 % age point was an extension of the increase of population in the labour market by 0.5%. (The Star)

Asia

- China Local Debt Growth Slows As Economic Expansion Cools. China’s chief auditor said growth in local government debt slowed, a sign that tighter scrutiny on borrowing and an economic slowdown have curbed credit. Outstanding debt for nine provinces and nine cities grew 3.79 % from the end of June last year through March, 7 %age points slower than the pace in the first half of 2013, according to a report delivered by Liu Jiayi, head of the National Audit Office, at a National People’s Congress meeting yesterday. The report was posted on the office’s website. (Bloomberg)

USA

- U.S. Economy Shrank In First Quarter By Most In Five Years. The U.S. economy contracted in the first quarter by the most since the depths of the last recession as consumer spending cooled. Gross domestic product fell at a 2.9 % annualized rate, more than forecast and the worst reading since the same three months in 2009, after a previously reported 1 % drop, the Commerce Department said today in Washington. It marked the biggest downward revision from the agency’s second GDP estimate since records began in 1976. The revision reflected a slowdown in health care spending. (Bloomberg)

- Equipment Orders Bolster Case For U.S. Growth Snapback. American factories received more orders for business equipment in May, pointing to gains in investment that will help the economy snap back from a first-quarter plunge. Bookings for capital goods such as computers, a proxy for business spending, rose 0.7 % after falling 1.1 % in April, according to data from the Commerce Department issued today in Washington. The increase in orders, combined with gains in employment, shows improving sales are giving companies the confidence to expand. Paced by growing demand for automobiles and housing, manufacturers will probably boost production to restock warehouses, lifting growth into the second half of 2014. (Bloomberg)

- U.S. Durable Goods Unexpectedly Fall In May. Orders for long-lasting U.S. manufactured goods unexpectedly fell in May, suggesting an anticipated rebound in growth this quarter could fall short of expectations, even as a measure of business capital spending plans rose. The Commerce Department said on Wednesday durable goods orders declined 1.0% as demand for transportation, machinery, computers and electronic products, electrical equipment, appliances and components, and defense capital goods fell. Orders for durable goods, items ranging from toasters to aircraft that are meant to last three years or more, increased by a revised 0.8 % in April, when they were boosted by defense equipment. Economists polled by Reuters had forecast orders being flat last month after April's previously reported 0.6 % gain. (Reuters)

- U.S. Services Sector Expands At Fastest Pace In Four-And-A-Half Years. The U.S. services sector expanded in June at the fastest pace in at least 4-1/2 years, pushed higher by increasing business activity, a survey showed on Wednesday. Financial data firm Markit said its "flash" services Purchasing Managers Index hit 61.2 in June, the highest reading since the survey began in October 2009, compared with May's final reading of 58.1. A reading above 50 signals expansion in economic activity. The services sector added employees at the fastest rate on record, matching the 55.4 reading hit in September 2013. Last month it read 52.8. (Reuters)

- Treasuries Gain On Durable-Goods Drop As Economy Shrinks. Treasuries rose, sending yields on benchmark 10-year notes to a three-week low, as reports showed the U.S. economy contracted more than forecast last quarter and demand for durable goods decreased. Yields dropped for a second day as the U.S sold $35 billion in five-year notes at higher-than average demand. The difference between yields on two- and 10-year notes narrowed to almost the least in a year, suggesting investors are questioning the pace of potential Federal Reserve interest-rate increases next year. Treasuries rose earlier as Middle East turmoil stoked refuge demand. Benchmark 10-year yields fell two basis points, or 0.02 %age point, to 2.56 % at 5 p.m. in New York after touching 2.53 %, the lowest level since June 3, according to Bloomberg Bond Trader data. (Bloomberg)

- U.S. Mortgage Applications Fall In Latest Week: MBA. Applications for U.S. home mortgages fell last week as both purchase and refinancing applications dipped, an industry group said on Wednesday. The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, fell 1.0 % in the week ended June 20. The MBA's seasonally adjusted index of refinancing applications fell 0.9 %, while the gauge of loan requests for home purchases, a leading indicator of home sales, fell 1.2 %. (Reuters)

Currencies

- Dollar Falls After ‘Surprisingly Negative’ GDP. The dollar fell against the euro Wednesday after data showed the U.S. economy shrank by 2.9% in the first quarter, which could validate the Federal Reserve’s commitment to keeping interest rates low for a while longer. The euro rose to $1.3631 from $1.3604 late Tuesday. The dollar inched down to ¥101.87 from ¥101.93 late Tuesday. The pound gave up post-data gains in recent trade, trading at $1.6983 versus $1.6987. The ICE dollar index, which pits the dollar against six other currencies, fell to 80.210 from 80.311 late in the prior session. (Market Watch)

Commodities

- U.S. Oil Up On Condensate Export Approval, Brent Falls. U.S. Crude oil inched higher on Wednesday after news of a U.S. Government decision to permit exports of lightly refined oil, while Brent Oil fell as fears of supply cuts from Iraq receded. Brent lost 46 cents to settle at $114.00 a barrel, as worries about sectarian violence reducing Iraqi exports seemed to fade. Brent hit a nine-month high of $115.71 last week on the fighting in Iraq. U.S. Crude gained 47 cents to settle at $106.50 a barrel. It had hit $107.50 in early trade as the market reacted to the news on U.S. Condensate exports. (Reuters)

- Gold Rises After Data Shows U.S. Economy Shrinks In Q1. Gold rose slightly on Wednesday after U.S. growth data came in weaker than expected, hitting the dollar, but bullion's failure to extend gains suggested some investors were taking profits after prices hit a two-month high in the previous session, traders said. Spot gold was up 0.2 % at $1,319.85 an ounce by 3:01 p.m. EDT (1901 GMT). Silver was up 0.4 % at $20.95 an ounce. Spot platinum edged up 0.2 % to $1,466.25 an ounce, while spot palladium climbed 0.3 % to $829 an ounce. (Reuters)