Malaysia

‘US Recognises Importance Of Bumiputera Policy’. The United States recognises the importance of Malaysia’s Bumiputera policy and said that it will be flexible and accommodative of interests that are consistent with the overall objectives of the Trans Pacific Partnership (TPP) agreement, said a top US trade official. US trade representative Michael Froman said the government has made it clear how important the Bumiputera policy is to the country, economically and socially. “We recognise that. We make it clear that we like to be flexible and will find ways to accommodate those interests consistent with the overall objective of the trade agreement. Most of the 12 countries in the TPP are either unitary states or federal states but Malaysia has more experience in this regard, he said in a media briefing, here, on Tuesday. According to an independent think-tank, Malaysia benefits the most from the TPP in terms of exports and contribution to the gross domestic product, after Vietnam.(NST)

Consumer Confidence Remains Firm In Q2. Malaysia’s Consumer Confidence Index remained firm in the second quarter of this year, with an increase of only one index point to 93 points, compared with the previous quarter. According to the Nielsen Global Survey of Consumer Confidence and Spending Intentions, it was encouraging to see that consumer confidence remained at the previous levels, given all the untimely events in Malaysia in the first half. Nielsen Malaysia country manager Richard Hall said expectations were that consumer confidence would decline, given the unfortunate incident of Malaysia Airlines’ flight MH370, questions around the goods and services tax implementation and the tightening credit control. He said 80 % of the country’s consumers continued to adjust their spending habit in the past year to increase household saving (against 64 % globally). (Bernama)

Only 4,000 SMEs Registered For GST. Although the Customs Department has targeted 100,000 small and medium enterprises (SMEs) to register for the Goods and Services Tax (GST) by the end of the year, only about 4,000 companies have responded by June 1. Deputy Finance Minister Datuk Chua Tee Yong said this had prompted the Government to intensify its efforts over the coming months. The department would co-operate with SME associations to boost registrations nationwide within the stipulated period, he said after a meeting with the associations here yesterday. Present were 25 representatives from 10 SME associations, including from the motor trade, motorcycle and scooters dealers, wholesalers, sundry goods providers and the printing industry. (The Star)

Asia

S.Korea Q2 Growth At Slowest In More Than A Year. South Korea's economy grew 0.6 % in April-June over the previous quarter, the central bank estimated on Thursday, the slowest in more than a year due to sluggish consumption while falling slightly below market expectations. The data follows 0.9 % growth for the first quarter on a sequential basis and marks the weakest since a 0.6 % gain in the first quarter of 2013. The median forecast from a Reuters survey of 27 analysts was 0.7 %, on a seasonally adjusted basis. The Bank of Korea estimates showed private consumption fell a seasonally adjusted 0.3 % in the second quarter after edging up 0.2 % in the January-March period. Capital investment rose 1.3 % after a 1.9 % decline. (CNBC)

Singapore's Inflation Dips To 1.8% In June On Smaller Rise In Car Costs. A smaller rise in car prices helped lower Singapore's inflation rate to 1.8 % last month from 2.7 % in May, data from the Singapore Department of Statistics showed on Wednesday. This was largely due to a sharp correction in certificate of entitlement premiums, according to a separate statement from the Trade and Industry Ministry and the Monetary Authority of Singapore. As a result, the cost of private road transport, including cars, rose 2.8 % in June from a year ago, moderating from the 8.1 % surge in May, the government bodies said. (The Straits Times)

Bank Indonesia Chief Seeks Economic Reform for Deficit Risks. Indonesia’s current-account deficit poses the biggest risk to an economy that needs structural reforms by its newly elected president, Bank Indonesia’s Governor Agus Martowardojo said. Increased oil imports and a ban on mineral ore exports have hampered the central bank’s efforts to narrow the trade balance, Martowardojo, 58, said today in a written response to Bloomberg questions. Policy makers, who raised interest rates last year to tackle the current-account gap and a weakening rupiah, now don’t want to hurt future growth momentum, he said. Widodo, known as Jokowi, plans to boost infrastructure and cut red tape to deliver a growth pace Indonesia hasn’t seen since before the Asian financial crisis of the late 1990s, a shift that he says would bolster the clout of the world’s fourth most-populous nation. Indonesia may have a current-account deficit for a couple of years, with the central bank seeking to reduce it to a sustainable level, he said. Martowardojo reiterated the central bank is expecting economic growth to moderate to a range of 5.1 % to 5.5 % this year, and for inflation to meet its 2014 target of 3.5 % to 5.5%. The current-account deficit was 3.4 % of GDP in 2013. (Bloomberg)

Australia Core Inflation Speeds Up. Australian consumer prices rose only modestly last quarter but a surprisingly high reading for a key gauge of underlying inflation was enough to dent market speculation of future rate cuts and lift the local dollar. The main offender was the trimmed mean measure of prices which jumped 0.8 % in the quarter and 2.9 % for the year, above analysts forecasts of 2.7 %. That could pose a challenge to the Reserve Bank of Australia's (RBA) confidence that inflation would stay comfortably within its long-term target band of 2 to 3 %. (Reuters)

Wheeler Signals N.Z. Rate Pause After Four Raises This Year. New Zealand’s central bank signaled it will pause its interest-rate increases amid benign inflation and a currency it said is at an “unjustified and unsustainable” level. The kiwi fell. “It is prudent that there now be a period of assessment before interest rates adjust further toward a more-neutral level,” Reserve Bank of New Zealand Governor Graeme Wheeler said in a statement released in Wellington after increasing the official cash rate by a quarter-percentage point to 3.5 %. “The economy appears to be adjusting to the monetary policy tightening that has taken place since the start of the year.” (Bloomberg)

USA

IMF says US growth will be a "disappointing" 1.7%. The International Monetary Fund has lowered its forecast for US economic growth for the second time this year. It also called for measures to help the poorest, suggesting a boost to the minimum wage and an expansion of tax credits. In its annual report card, the IMF said overall growth for this year would be "disappointing" at 1.7%, blaming the contraction at the start of the year. In June it had predicted growth of 2% for the year. The report concluded the country was therefore likely to remain with below full employment until 2018. (BBC)

U.S. Mortgage Applications Rise In Latest Week. Applications for U.S. home mortgages rose last week as both purchase and refinancing applications picked up, 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 2.4 % in the week ended July 18. The MBA's seasonally adjusted index of refinancing applications climbed 4.1 %, while the gauge of loan requests for home purchases, a leading indicator of home sales, rose 0.3 %. (Reuters)

Europe

Euro Zone Confidence Falls In July, Bodes Ill For Recovery. Consumer confidence in the euro zone deteriorated much more than expected in July, adding to worries about the health of the bloc's economic recovery, European Commission preliminary data showed on Wednesday. The 18 countries using the euro saw consumer confidence falling to -8.4 in July from a revised -7.5 in June, showing the worst reading since April, when it stood at -8.6. In another sign of the fragility of the recovery, euro zone industrial production dropped sharply in May with only the energy sector thriving. Confidence is suffering partly because of the conflict in eastern Ukraine, where separatists backed by Russia are fighting government forces. As a result, the European Union is considering economic sanctions against Russia, but such action would also hurt the euro zone economy. (Reuters)

Bank of Spain sees GDP growth picking up to 2 % in 2015. The Bank of Spain revised up its economic growth forecasts for this year and next on Wednesday, saying it expected a 2 % expansion in 2015 after internal demand and business investment gathered pace in recent weeks. The central bank, which now sees the Spanish economy growing 1.3 % this year compared to 1.2 % previously, had forecast in March that gross domestic product would grow by 1.7 % in 2015. The central bank said GDP had probably grown 0.5 % between April and June compared with the previous quarter, after a 0.4% expansion in the first three months of 2014. "The private components of domestic expenditure – consumption and business investment, essentially – were the mainstay of GDP in Q2," it said in its economic bulletin. (Reuters)

French Parliament Backs Tax Relief, More Savings In Supplementary 2014 Budget. France's parliament backed a supplementary budget for 2014 by a comfortable majority on Wednesday, in a relief for President Francois Hollande following opposition from within his own party ranks. The updated budget pares back public spending by an extra 4bil euros ($5.4bil) while granting tax relief to nearly 4 million households, as the unpopular government tries to meet deficit targets but also assuage the concerns of angry voters. (Reuters)

French Industrial Firms See Exports Boosting Outlook: INSEE. France's industrial companies expect export orders to drive a pick up in demand in the next few months, with sentiment among them stable at a low level in July, surveys showed on Wednesday. In a sign relief may be on the way for the struggling industrial sector, companies said they expected overall demand would be above the long-term average in the coming three months, official statistics agency INSEE reported. Companies expected foreign demand to improve even though they felt their competitive position in foreign markets had deteriorated to well below the long-term average, INSEE said in a quarterly survey. (Reuters)

Currencies

Pound Drops To Monthly Low Against Dollar. The pound fell to its lowest point against the dollar since June 30 following the release of minutes from the Bank of England’s July meeting on Wednesday. Sterling fell to a low of $1.7024, from $1.7060 late Tuesday and from $1.7088 ahead of the BOE release. Against the euro, the pound slipped to €1.2654 from €1.2670 Tuesday. The dollar rose against the yen, buying ¥101.540, up from ¥101.47 Tuesday. The ICE U.S. dollar index, which measures the greenback’s performance against a basket of six other currencies, rose to 80.8130 Wednesday from 80.7810 Tuesday. The euro was flat at $1.3462. (MarketWatch)

Commodities

Crude Oil Rises On Drop In U.S. Crude Inventories, Geopolitical Risk. Crude oil futures rose on Wednesday, as oil stockpiles in the United States fell more than expected and geopolitical tensions in Eastern Europe and the Middle East persisted. U.S. crude's gains outpaced Brent's for most of the session, after a government report showing that U.S. crude stocks fell by 4 million barrels last week, but Brent caught up as traders covered short positions ahead of the close. The U.S. Energy Information Administration also reported crude oil inventories at Cushing, Oklahoma, the delivery point of the U.S. crude contract, fell by 1.45 million barrels. Brent crude for September delivery rose 70 cents to settle at $108.03 and continued to climb in post-settlement trade to stand at $108.19 at 3:48 p.m. EDT (1948 GMT). U.S. crude for September delivery rose 73 cents to $103.12 a barrel. (Reuters)

Gold Slips As Equity Gains Dent Safe-Haven Appeal. Gold fell for a second day on Wednesday as gains in U.S. equities and dearth of new developments from conflicts in Ukraine and the Middle East prompted investors take profits. Sluggish physical demand in Asia in the seasonally quiet summer period is also weakening support for any price rally, dealers said. Bullion prices initially rose on worries about geopolitical tensions, but later gave up those gains and found support at its 100-day moving average, an important threshold for technical traders, near $1,303 an ounce. Spot gold was down 0.2% at $1,304.55 an ounce by 3:22 p.m. EDT (1922 GMT). Among other precious metals, spot silver was unchanged from Tuesday's close at $20.88 an ounce. Spot platinum slipped 0.2% to $1,476.20 an ounce, while spot palladium was down 0.2% at $868.43 an ounce. (Reuters)