Malaysia

Govt Expects 0.3pc GDP Growth After GST. The government expects growth of 0.3 % in the country’s gross domestic product (GDP) and 0.5 % in exports with the implementation of the Goods and Services Tax (GST) next year. “Right now, our exports are more expensive by an average 10 % because of the existing sales and services tax,” said deputy finance minister Datuk Ahmad Maslan at a GST dialogue, here, yesterday. “However once the GST comes into play, prices on our export products will be reduced, thus becoming more competitive. We therefore, foresee exports growing by 0.5 % within the first year of GST implementation,” he said. Ahmad said the growth figure will most likely be reflected in the second quarter of 2015, and will definitely grow higher going forward. (NST)

Asia Pacific

Both Candidates In Indonesia Election Claim Victory; Jokowi Ahead In More Counts. Both candidates claimed victory in Indonesia's presidential election on Wednesday, suggesting there could be a drawn out constitutional battle to decide who will next lead the world's third-largest democracy. Just a few hours after voting closed, Jakarta governor Joko "Jokowi" Widodo said he had won, based on quick counts of more than 90 % of the votes. A victory for him would be seen as a triumph for a new breed of politician that has emerged in Southeast Asia's biggest economy, and increase the promise of desperately needed reform in government. But ex-general Prabowo Subianto, the rival candidate viewed as representative of the old guard that flourished under decades of autocratic rule, said other, unnamed, quick counts of votes favoured him. The results however are unofficial: the Election Commission will take about two weeks to make an official announcement and the new president is not due to take office until Oct. 1. (Reuters)

Indian Government Report Urges Strong Steps To Contain Fiscal Deficit. India's fiscal situation is worse than it appears, Prime Minister Narendra Modi's government said in an economic report on Wednesday that called for tough measures to shore up public finances and reduce inflation. Wednesday's report recommended tackling food and fertiliser subsidies to lower spending, while broadening the tax base. Tax collection is less than 9 % of gross domestic product, about a quarter of the average in the OECD group of developed nations. The Economic Survey, presented the day before the federal budget, forecast GDP growth of between 5.4 and 5.9 % in 2014/15. It warned that weak monsoon rains which are essential for farming could keep growth closer to 5.4 %. In June, India's central bank forecast growth of 5.5 % in the financial year that ends in March 2015. (Reuters)

Australia Consumer Confidence Edges Higher In July. A measure of Australian consumer sentiment improved modestly in July as worries about family finances eased, a survey showed on Wednesday, though the depressing impact of an unpopular federal budget continued to linger. The survey of 1,200 people by the Melbourne Institute and Westpac Bank showed the index of consumer sentiment rose a seasonally adjusted 1.9 % in July, from June when it had inched up only 0.2 %. The index still has not fully recovered from May's 6.8 % dive which followed a budget of welfare reforms, cutbacks and increased charges for services. The index reading of 94.9 for July was down 7.1 % on the same month last year and means pessimists still exceed optimists. (Reuters)

USA

Fed Mulls Policy Exit, Eyes October End Of Asset Purchases. The Federal Reserve has begun detailing how it plans to ease the U.S. economy out of an era of loose monetary policy, indicating it will end its asset purchases in October and appearing near agreement on a plan to manage interest rates in the future, according to minutes of the last Fed policy meeting. The minutes from the June 17-18 meeting indicate the Fed envisions using overnight repurchase agreements in tandem with the interest it pays banks on excess reserves to set a ceiling and floor for its target interest rate. Though no decisions have been announced, the discussion has become detailed enough for Fed officials to contemplate the proper spread between the two - mentioned in the minutes as 20 basis points. (Reuters)

Mortgage Applications Rose In Latest Week. Applications for U.S. home mortgages rose last week as both purchase and refinancing applications increased, 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, rose 1.9 % in the week ended July 4. The MBA's seasonally adjusted index of refinancing applications rose 0.4 %, while the gauge of loan requests for home purchases, a leading indicator of home sales, increased 3.7 %. Fixed 30-year mortgage rates averaged 4.32 % in the week, up 4 basis points from 4.28 % the week before. (Reuters)

Europe

German Cabinet Clears Way For Europe's Banking Union. Germany's cabinet has approved a package of draft laws which effectively give the go-ahead to Europe's plans for banking union - its main confidence-building response to the crisis in the financial sector, a government source said on Wednesday. The European plans will mean there is one supervisor for euro zone banks, one set of rules to close or restructure troubled banks and one pot of money to pay for everything. To minimize the expense to euro zone taxpayers, European Union policymakers have drawn up a law under which shareholders, creditors and very large depositors will lose money first in the event of a bank failure. (Reuters)

Currencies

China To Keep Intervening On Yuan, Finance Minister Says. China said it can’t stop intervention in the yuan because economic growth is too weak and capital flows aren’t steady enough to warrant changes. “The U.S. side has repeatedly asked, in terms of exchange-rate policy, whether China needs to intervene any more,” Finance Minister Lou Jiwei said at a press briefing yesterday in Beijing during economic talks between the countries. “But for us, under the current situation, when the economy hasn’t recovered fully and when cross-border capital flows are not completely normal, we’ll continue” existing practices, he said. The comments signal China may move more slowly than the U.S. wants on liberalizing currency policy after it widened daily trading limits in March and the central bank said it would eventually end normal intervention in the market. Lou spoke hours after Treasury Secretary Jacob J. Lew said moving to a market-determined exchange rate will be a “crucial step” in helping drive China’s economic growth. (Bloomberg)

Dollar Falls After FOMC Minutes. The dollar reversed earlier gains against most major currencies, with the exception of the yen, in the wake of minutes from the latest Federal Reserve meeting Wednesday that showed it would end its assetpurchasing program in October. The ICE dollar index which measures the greenback against a basket of six rivals, fell to 80.032, compared with 80.176 late Tuesday. Against the Japanese yen , the dollar rose to ¥101.61 from ¥101.57 on Tuesday. The euro rose slightly to $1.364 from Tuesday’s level of $1.361. The pound rose to $1.715, from $1.713 Tuesday, while the Australian dollar was trading at 94.13 U.S. cents, up from 93.99 U.S. cents. (Market Watch)

Commodities

Crude Slides Further As Weak Gas Demand Stokes Fears. U.S. crude shed more than $1 and Brent fell on Wednesday, as a rise in U.S. gasoline inventories signaled weak demand, and a restart of a Libyan oilfield helped ease supply worries. Brent crude fell 70 cents to hit a new one-month low near $108 a barrel, the weakest since June 9, and down about 6 % from a nine-month top hit in June. U.S. crude dropped $1.11 to $102.29 a barrel, after Tuesday's settlement marked its longest losing run since 2009. (Reuters)

Gold Up As Fed Minutes Keep To Expectations; Palladium Jumps. Gold rose on Wednesday, holding above $1,320 an ounce, after the U.S. Federal Reserve's latest meeting minutes did not suggest any hike in U.S. interest rates soon. Spot gold was up 1 % at $1,330 an ounce by 3:25 p.m. EDT (1925 GMT). U.S. gold futures' most-active contract , for delivery in August, settled up $7.80 an ounce at $1,324.30. The spot price of silver rose along with gold, gaining 0.8 % to $21.17 an ounce. Spot palladium was up 0.5 % at $871.22 an ounce. During the session it hit $873.80 an ounce, its highest since February 2001. Spot platinum was up 1.3 % at $1,507 an ounce. (Reuters)