Global

Talks on EU-U.S. Trade Deal to Stretch into 2016. Talks between the European Union and United States on a transatlantic trade accord will stretch into 2016, the EU's chief negotiator said on Tuesday, adding that the discussions were about to enter a "more difficult" and "intense" stage. This year is seen as crucial in making progress on the Transatlantic Trade and Investment Partnership (TTIP), with the U.S. presidential election set for 2016 and President Barack Obama leaving office in January 2017. Nothing has been agreed so far and expectations of a rapid deal are low. One of the major stumbling blocks for the deal, which seeks to reduce trade barriers and harmonize regulations, is an investor protection clause wanted by the Americans. Many in Europe fear U.S. multinationals will use a so-called investor-to-state dispute settlement (ISDS) mechanism to challenge Europe's food, labor and environmental laws on the grounds that these restrict free commerce. (Reuters)

Malaysia

ETP and GTP Annual Report 2014. The 2014 report card for the Economic Transformation Programme (ETP) and Government Transformation Programme (GTP) gave the impression that the Government would remain focused on countering the continued global and domestic challenges in 2015 and beyond. In the years between 2010 and 2014 it has made significant progress in 5 impact areas, namely, increasing gross national income (GNI) per capita to set Malaysia on the part of becoming a high-income nation, increasing private investment and the private sector’s role in the economy, creating new jobs in key industries of national importance, delivering basic services to rural areas and alleviating poverty through direct cash transfers and loans to entrepreneurs. As a result, average GDP growth in the first half of the transformation programme (2010-2014) was 5.8%. All it needs is to maintain a growth trajectory of more than 5.0% for the second half of the transformation programme till 2020. Immediately, it needs to manage its fiscal balance and debt amid concern over the impact of sharp fall in oil and gas prices, the introduction of the broad-based Goods and Services Tax (GST) and issues regarding negative perceptions on governance. (See Economic Viewpoint for further comments)

Job Ads Up 15% in Q1. Malaysia’s overall annual growth in job advertisement volume increased by 15% in the first quarter of 2015, according to the Asia Job Index published by the international recruitment consultancy, Robert Walters. In a statement on Tuesday, Robert Walters said there had been constant growth and progress in the last five years for Malaysia in the shared services and fast-moving consumer goods sectors: “This has in turn created job opportunities for accounting, finance and information technology professionals with existing firms and have even expanded to global operations. Market sentiment in Malaysia remains positive and we are seeing employers being more committed to the long-term strategy of investing in talent.” (Bernama)

Asia

Japan Plans More Renewables, Less Nuclear. The Japanese government proposed Tuesday an optimal energy mix for 2030 that consists of 20-22% from nuclear power and up to 24% from renewable energy. Nuclear power would decrease from 28.6% before the March 2011 Fukushima meltdown while renewable energy would roughly double from about 11% in fiscal 2013. Fossil-fuel-based energy would decline to 56% from the current 88%. Coal would account for 26%, down from 30% currently, and liquefied natural gas would be cut to 27% from 43% now. The draft proposal drawn up by the Ministry of Economy, Trade and Industry got a green light from the ministry's advisory body Tuesday. It will be finalized by June after ruling-party discussions and public comments. The government assumes that some of the existing reactors, including those more than 40 years old, will resume operations. (Nikkei)

Japan's Tax Revenue Seen Surpassing Pre-Lehman Level. Japan's tax revenue likely will rise 5 trillion yen on the year to total 52 trillion yen ($432 billion) for fiscal 2014, helped by an earnings recovery that boosted payments from the corporate sector. The figure would top a recent peak reached in fiscal 2007 before the Lehman shock. Actual revenue from April 2014 to March 2015 totaled 39.67 trillion yen, up 12.3% on the year, according to Finance Ministry data released Tuesday. Corporate taxes from companies that close their books in March will be paid in May, and some other taxes also are received after March 31. With these additions, the aggregate for the fiscal year likely will top the 51 trillion yen of fiscal 2007. For March alone, tax revenue rose 1.2% on the year to 2.53 trillion yen. (Nikkei)

Thailand Braces for Poor Q1 after Weak Export Performance. Thai exports fell for a third month in March, suggesting Southeast Asia's second-largest economy will post a quarterly contraction in the first three months of the year as a key engine of growth fails to fire up. Exports, which equal more than 60% of the economy, in March fell 4.45% from a year earlier, the Commerce Ministry said, deeper than a 3.45% decline forecast in a poll. The ministry blamed the poor export performance on slow global growth and a strong baht. Annual exports to China fell 8.3% in March, while those to Japan dropped 8.4% and slipped 1.2% to Europe. Shipments to the United States rose 5.6%. Imports in March fell 5.89% after rising 1.47% in February. Economists had expected a flat performance. (Reuters)

Singapore Central Bank Says Core Inflation to Moderate in Q2-Q3 Before Rising. Singapore's core inflation may moderate in the second and third quarters and headline inflation could be negative for "some consecutive months", the central bank said on Tuesday. Inflation was expected to return next year as oil prices pick up, it said. Direct oil-related items are expected to dampen overall inflation by up to 1 percentage point in 2015 after a negligible contribution last year, the Monetary Authority of Singapore (MAS) said in its half-yearly macroeconomic review. It added that while the labour market is likely to remain tight, pass-through of costs should remain moderate because of the slow growth environment. (Reuters)

USA

U.S. Consumer Confidence Slides in April. Consumer confidence fell this month to the lowest level in four months, knocked down by a slowdown in hiring. The Conference Board said Wednesday that its consumer confidence index fell to 95.2 in April from 101. 4 in March, the lowest reading since December's 93.1. Consumers' assessment of current economic conditions fell for the third straight month, and their expectations for the future fell as well. Lynn Franco, the Conference Board's director of economic indicators, blamed "the recent lackluster performance of the labor market." (AP)

Case-Shiller Home Price Index Climbs Modestly in February. Home prices continued to rise modestly in February in a continued upward push in home values which underscores concerns that buyers’ incomes aren’t keeping pace. The S&P/Case-Shiller Home Price Index, covering the entire nation, rose 4.2% in the 12 months ended in February, weaker than a 4.4% increase in January. “Home prices continue to rise and outpace both inflation and wage gains,” said David Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices. Still, Mr. Blitzer cautioned that only two markets—Denver and Dallas—have surpassed their prerecession housing boom peaks. “If a complete recovery means new highs all around, we’re not there yet,” he said. (The Wall Street Journal)

U.S. Homeownership Dips, but Household Formation Rises. U.S. homeownership slipped to a 25-year low in the first quarter, but sustained strong gains in the pace at which Americans are setting up homes supported the view that the housing sector will boost economic growth this year. The seasonally adjusted home ownership rate dipped to 63.8%, the lowest since the fourth quarter of 1989, the Commerce Department said on Tuesday. The rate, which peaked at 69.4% in 2004, was 64.0% in the fourth quarter. Household formation, however, increased by 1.5 million in the first quarter from the same period in 2014. It was up 1.7 million in the fourth quarter. (Reuters)

Europe

UK GDP Growth Disappoints as Election Looms. U.K. gross domestic product expanded slower than expected in the first quarter, in the last major economic indicator before the country's general election in nine days' time. A first estimate from the Office of National Statistics (ONS) showed that GDP grew by 0.3% quarter-on-quarter, below a forecast of 0.5%. Although services output increased by 0.5% over the period, the headline figures was pulled down by the three other main sectors. Construction fell by 1.6%, production slid 0.1% and agriculture fell by 0.2%, the ONS said. The data will not be welcomed by U.K. Prime Minister, David Cameron, who has made the strength of the economy a key part of his campaign ahead of a general election on May 7. (CNBC)

French Consumer Confidence at Highest in Five Years. French consumer confidence rose for the third consecutive month in April to reach its highest in over five years, data showed on Tuesday. The index released by the official INSEE statistics agency showed consumer morale reading ticked up to 94 this month from 93 in March, its highest reading since January 2010 and in line with expectations of economists. Households who took part in the survey said they were more willing to make significant purchases and were slightly more upbeat about both the state of their future finances and their ability to save. However there was a sharp increase in concerns unemployment would continue to rise in the survey, which took place between March 30 and April 18. (Reuters)

Currencies

Dollar Slides to 8-Week Low on U.S. Data; Traders Eye Fed. The dollar dropped to an eight-week low on Tuesday after a weak U.S. consumer confidence report, with investors cautious about a Federal Reserve meeting that could reinforce the view that interest rates in the world's largest economy might rise more gradually than initially thought. The dollar lost 4% in the past six weeks as expectations of a rate rise in June have faded after a run of soft data triggered worries that the U.S. economy is stalling. In late trading, the dollar index was down 0.7% at 96.115. It fell as low as 96.011, the weakest level since March 5. Benefiting from the dollar's weakness, the euro gained 0.8% to $1.0973. It earlier rose to $1.0990, its highest since April 6. The Australian dollar was the biggest gainer, rising 2.0% to US$0.8013 after earlier hitting a three-month high. A rally in iron ore prices raised expectations that the Reserve Bank of Australia will not cut rates next week. (Reuters)

Commodities

Oil Supply Glut Snuffs Early Rally on Mideast Tension. Oil prices remained under pressure on Tuesday, with Brent settling lower and U.S. crude near flat, as worries about swollen U.S. crude stockpiles cut price gains from an early rally on security scares in the Middle East and a weak dollar. After an early rally, selling pressure grew as investors worried about record high U.S. stockpiles. After the market closed, the American Petroleum Institute (API), an industry group, reported that U.S. crude inventories rose to a record high for the 16th straight week. U.S. crude settled up 7 cents at $57.06, after running to as high as $57.83. Brent settled down 19 cents, or 0.3%, at $64.64 a barrel, after rallying to as high as $65.49. Earlier, oil had rallied as Iranian forces boarded the Marshall Islands-flagged MV Maersk Tigris in the Gulf after firing warning shots across the bow. Saudi-owned Al Arabiya television initially said the vessel was a U.S. ship. (Reuters)

Gold Up 1% on Soft Dollar after Weak U.S. Data. Gold rose 1% on Tuesday after disappointing U.S. data hit the dollar and dampened expectations that the Federal Reserve will hint at this week's policy meeting at an interest rate hike in coming months. Spot gold climbed 1.1% to a three-week high of $1,215 after the data showed U.S. consumer confidence dropped in April to its lowest since December. Among other precious metals, silver rose 1.5% to $16.60 an ounce after a 4.3% gain in the previous session, boosted by gold's advance. Platinum turned up 0.4% to $1,153 an ounce after a 2.3% jump on Monday, while palladium rose 0.1% to $778.50 an ounce. (Reuters)