Malaysia

Malaysia Sukuk Sales Jump to 16-Month High as Confidence Returns. Islamic bond sales in Malaysia jumped this month to the most since December 2013, adding to signs confidence is returning to the world’s biggest sukuk market. Issuance was 24 percent higher than in March at 11 billion ringgit ($3.1 billion), according to figures compiled by Bloomberg. Sovereign wealth fund Khazanah Nasional accounted for 2 billion ringgit and DanaInfra Nasional, a state-owned company that funds subway construction, raised 3.5 billion ringgit. Malaysia’s government drew bids for six times the $1.5 billion of dollar-denominated sukuk it offered last week and the ringgit is having its best month in three years. (Bloomberg)

Asia

Thailand Unexpectedly Cuts Benchmark Rate. Thailand’s faltering economy pushed the central bank to unexpectedly cut its policy rate on Wednesday, as poor exports and slower-than-predicted economic recovery continued to exact a toll on business. The Bank of Thailand’s monetary policy committee members voted 5-2 to cut the benchmark interest rate by 0.25 percentage point to 1.5%, citing slow economic recovery despite higher government spending and a sunnier outlook for the tourism sector. The latest rate cut also aimed to weaken the Thai baht to lift exports, which account for roughly two-thirds of Thailand’s gross domestic product, while helping boost domestic spending. (The Wall Street Journal)

Thai Finance Ministry Trims 2015 GDP Growth Forecast to 3.7%. Thailand's finance ministry trimmed its economic growth forecast this year to 3.7% from 3.9% seen three months ago due mainly to weak exports, a ministry official said on Wednesday. The ministry now expects exports to grow only 0.2% this year, compared with 1.4% seen in January, Kritsada Jinavijarana, director-general of the Fiscal Policy Office, told a news conference. He said the economy may have grown 3.2% in the first quarter from a year earlier. Official first-quarter GDP data will be announced by the state planning agency on May 18. (Reuters)

Indonesia’s Finance Minister says GDP to Grow 5.2% - 5.7% in 2015. Indonesia's gross domestic product is likely to grow by between 5.2% and 5.7% in 2015, Finance Minister Bambang Brojonegoro told a conference on Wednesday. Brojonegoro said that slower growth in China would hinder the economy this year, and that government spending has been weaker than expected. The official target for growth this year is 5.7%. Last year, Southeast Asia's largest economy grew 5.02%, the slowest pace in five years, amid tumbling prices for coal and other commodities. (Reuters)

South Korea May Manufacturing Outlook Unchanged from April. A sentiment survey of South Korean manufacturers showed companies felt as negatively about their business conditions in May as they did a month earlier, central bank data showed on Wednesday. The manufacturing business survey index (BSI) for May remained at a seasonally adjusted 76, unchanged from the index reading in April, the Bank of Korea said in a statement. The index has failed to rise above the neutral point of 100 since September 2010, which indicates companies that expect business conditions to deteriorate outnumber those who feel the situation will improve. (Reuters)

China to Reduce Import Tariffs on Some Consumer Goods. China will reduce import tariffs on some consumer goods by the end of June to help boost domestic spending and support the slowing economy at a time when record numbers of cash-rich Chinese tourists are splurging overseas. The State Council, China's Cabinet, said the decision was made in order to satisfy rising consumer demand but did not specify which consumer goods would benefit or how much tariffs would be reduced. Consumers in China generally pay 20% more for luxury goods than their counterparts in Europe, while Japan and South Korea are also much cheaper shopping destinations due to their weaker currencies, according to analysts. (Reuters)

USA

U.S. Economic Growth Nearly Stalls Out at 0.2%. The U.S. economy slowed to a crawl at the start of the year as businesses slashed investment, exports tumbled and consumers showed signs of caution. Gross domestic product expanded at a 0.2% seasonally adjusted annual rate in the first quarter, the Commerce Department said Wednesday. The economy advanced at a 2.2% pace in the fourth quarter and 5% in the third. Economists had expected growth of 1% in the first three months of this year, though many were braced for a surprise to the downside. The first-quarter figures repeat a common pattern in recent years: one or two strong readings followed by a sharp slowdown. First-quarter GDP growth had averaged 0.6% since 2010 and 2.9% for all other quarters. That has worked out to moderate overall expansion but no growth breakout. (The Wall Street Journal)

Fed Keeps Options Open as It Sees Better Times Ahead. The Federal Reserve on Wednesday said it expects the economy will grow at a “moderate pace” despite the weak first quarter, keeping its options open for the timing of its first interest rate hike since 2006. “Although growth in output and employment slowed during the first quarter, the committee continues to expect that, with appropriate policy accommodation, economic activity will expand at a moderate pace, with labor market indicators continuing to move toward levels the committee judges consistent with its dual mandate,” Fed officials said in their latest policy statement, released after two days of talks. While growth had “slowed” in the first quarter, it was due in part to “transitory factors,” officials said. The Fed noted for the first time that “non-energy imports” were keeping inflation below its 2% annual target, a veiled reference to the impact of the strong dollar. The Fed statement is consistent with Fed Chairwoman Janet Yellen’s stated intention to be data-dependent in deciding when to raise interest rates and make that decision on a meeting-by-meeting basis. (MarketWatch)

U.S. Pending Home Sales Index Rises for Third Straight Month. A forward-looking gauge of U.S. home purchases rose for the third straight month in March, a sign of firming demand in the housing market. The National Association of Realtors said Wednesday its pending home sales index, which is based on contract signings for purchases of previously owned homes, increased 1.1% to a seasonally adjusted level of 108.6 in March from an upwardly revised reading of 107.4 in February. Economists surveyed by The Wall Street Journal had expected pending home sales would rise 1% in March. Home sales typically close within a couple months after signing. (The Wall Street Journal)

Europe

Eurozone Morale Slips in April, but Deflation Threat Eases. Confidence in the euro zone's economy slipped slightly in April but business morale improved and household expectations of rising prices suggested that the threat of deflation may have been overcome. The European Commission's economic sentiment indicator fell by 0.2 points to 103.7, worse than the 103.9 that economists had forecast in a Reuters poll, although there were no signs that a recovery that began in December is falling away. Business morale rose 0.09 points to 0.32. Most strikingly, consumer inflation expectations continued to climb back up from their record low in January, rising for a third straight month and offering evidence that the European Central Bank's money-printing plan is having the desired effect. (Reuters)

Eurozone Lending Grows after Three Years in the Red. Lending in the euro zone increased for the first time in three years, the European Central Bank said on Wednesday, marking a new chapter in the bloc's recovery after the launch of a massive money-printing program. Lending across the 19 countries in the currency union rose by 0.1% on the year in March, giving hope that Europe, whose economy has trailed that of the United States, may finally be turning the corner. Although the rise is small, it seals a recent upward trend and is a significant improvement after three years of nearly uninterrupted and often sharp monthly falls, spurred by a banking and debt crisis. (Reuters)

Currencies

Dollar Drops to Nine-Week Low as U.S. GDP Weighs. The dollar sank to a nine-week low on Wednesday after data showed the U.S. economy grew much more slowly than expected in the first quarter, reinforcing expectations for a gradual pace of interest rate rises by the Federal Reserve. The greenback, however, trimmed its losses after the Fed released its monetary policy statement. The dollar index hit its lowest level since late February, falling for the sixth consecutive day. In late trading, the dollar index was down 0.9% at 95.217, reducing losses after the Fed statement. Benefiting from the dollar's losses, the euro climbed to an eight-week peak. It was last up 1.1% at $1.1102, supported by data showing lending to euro zone households and companies rose in March for the first time in three years. (Reuters)

Commodities

Oil Hits 2015 Highs after First U.S. Hub Stock Draw in Five Months. Oil prices hit the highest this year on Wednesday after the first crude stock draw in five months at the U.S. Cushing, Oklahoma hub suggested an oil glut may be starting to ease. Government data showing a smaller-than-expected rise last week in crude inventories throughout the United States also aided sentiment, although some traders felt the market was ignoring bearish elements like higher production. Prices settled up about 2% or more on Wednesday, with early strength coming from a leadership reshuffle announced at Saudi national oil company Aramco. U.S. crude futures closed up $1.52 at $58.58 a barrel, after hitting a 2015 high of $59.33. Futures of Brent crude, the more widely-used benchmark, finished up $1.20 at $65.84 after hitting its year high at $66.72. U.S. crude futures are poised to end April up nearly 23% and Brent almost 20% higher, the biggest monthly gains since May 2009. (Reuters)

Gold Falls after Fed Does Not Rule Out 2015 Rate Rise. Gold fell on Wednesday, extending the session's losses after the U.S. Federal Reserve signalled it was taking a meeting-by-meeting approach on when to raise interest rates for the first time since 2006. Spot gold fell to a session low of $1,201.13 after the Fed statement, and was down 0.6% at $1,204.70 an ounce at 1903 GMT. It gained nearly 3% in the last two sessions, rising to a three-week high of $1,215 on Tuesday. Silver was down 0.3% at $16.54 an ounce. Platinum was down 0.2% at $1,150.49 an ounce, while palladium dropped 0.5% to $779.75 an ounce. (Reuters)