Global

Global Semiconductor Sales Rise 6% in First Quarter. World-wide semiconductor sales rose 6% in the first quarter to $83.1 billion, driven by increases in the Americas and China, the Semiconductor Industry Association said Monday. “Despite macroeconomic challenges, first-quarter global semiconductor sales are higher than they were last year, which was a record year for semiconductor revenue,” said SIA Chief Executive John Neuffer. Global sales for the month of March increased to $27.7 billion, led by a 14.2% rise in the Americas and a 13.3% increase in China. In the Asia Pacific region, chip sales edged 3.8% higher. In Europe and Japan, though, sales declined 4% and 9.6%, respectively. (The Wall Street Journal)

Asia

Indian Services Growth Loses More Steam in April: PMI. Growth in India's dominant services industry continued to lose momentum in April as domestic demand softened, a business survey showed on Wednesday. The HSBC Services Purchasing Managers' Index, compiled by Markit, fell to a three-month low of 52.4 in April from March's 53.0, but remained well the 50 level that separates growth from contraction. It has been above that level for a year. The index monitoring new business fell to a six-month low of 51.6 from March's 53.5, prompting some firms to cut jobs. Some respondents also reported tougher competition. "Inflation rates for both input and output prices were weak by historical standards, providing the RBI with more scope for further rate cuts," said Pollyanna De Lima, economist at Markit. (Reuters)

Shipping Industry Points to More Asian Economic Weakness. Steep drops in Asian shipping rates are adding to fears about slowing trade, as a fall in export orders from countries across the region depresses demand for ships carrying 90% of world trade. Rates for container ships carrying finished goods are down 30% this year, close to record lows despite a recent rebound, and rates for bulk carriers used to transport goods such as iron ore and coal are also near historic lows. Although shipping rates also reflect sector-specific factors such as vessel orders and seasonal demand swings, analysts say they can act as a bellwether of global trade given that the vast majority of goods are transported by ship. (Reuters)

China Pulls Out Stops to Avoid Lay-Offs as Economy Cools. As growth in China's sagging economy looks on the verge of spilling below 7%, officials worried about a spike in unemployment are pulling out all the stops to avoid mass lay-offs. State firms are encouraged to keep idle workers employed, subsidies and tax breaks are given to companies that do not fire their workers, and some businesses are even enticed into hiring despite the slackening economic growth. The measures appear to be working for now, said a senior economist at the Development Research Center, a think-tank affiliated to China's cabinet. (Reuters)

China Eyes Export Fillip in Modern Silk Road. China should make use of its plans to build a modern Silk Road to drive its exports of rail, energy, construction and telecommunication equipment, the country's cabinet said on Wednesday. Formally known as the "One Belt, One Road" project, the new Silk Road scheme should adopt flexible investment and construction policies to lift overseas demand and employment and drive China's equipment exports, the State Council said. China's financial sector should also be developed to drive exports, the cabinet said in an online statement after a weekly meeting. A yuan payments system will be built, regulations for overseas investment simplified, and more uses found for China's $3.7 trillion foreign exchange reserves. (Reuters)

High-flying Overseas Subsidiaries Lifting Japan Inc. Earnings are soaring at Japanese companies' subsidiaries abroad, highlighting an emerging trend of earning income through direct investment rather than relying on exports. Direct investment income, including dividends and interest from overseas units as well as these companies' retained earnings, totalled 6.54 trillion yen ($54.4 billion) in 2014, according to the Ministry of Finance. This marks a nearly 70% jump from 2012, when the Japanese currency had strengthened beyond 80 to the dollar. The amount was equivalent to about 8% of pre-tax profit across all industries. Growth was particularly sharp in the Asean region, which accounts for 12-13% of Japan's foreign direct investment stock. Income from Asean in the January-September period climbed 53% on the year. (Nikkei)

USA

U.S. Mortgage Applications Fall in Latest Week: MBA. Applications for U.S. home mortgages fell last week as interest rates jumped, 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 4.6% in the week ended May 1. The MBA's seasonally adjusted index of refinancing applications fell 8.3% to its lowest level since January, while the gauge of loan requests for home purchases, a leading indicator of home sales, rose 0.8% to its highest level since June 2013. (Reuters)

Fed's Yellen Says Equity Valuations High, Warns of 'Potential Dangers'. Federal Reserve Chair Janet Yellen on Wednesday pointed to high valuations in the stock market and said the central bank needs to keep close tabs on the non-bank lending sector. Yellen was answering questions from International Monetary Fund Managing Director Christine Lagarde at a "Finance and Society" conference here. "I would highlight that equity market valuations at this point generally are quite high," Yellen said. "There are potential dangers there." In a question from Lagarde about financial stability concerns, Yellen said that she sees risks as moderated and does not see any bubbles forming, though the central bank is watching the issue closely. (Reuters)

U.S. Private Sector Adds 169,000 Jobs in April: ADP. U.S. private employers added 169,000 jobs last month, the fewest since January 2014 and far below economists' expectations, a report by a payrolls processor showed on Wednesday. Economists had forecast the ADP National Employment Report would show a gain of 200,000 jobs. March's private payrolls were revised down to an increase of 175,000 jobs from the previously reported 189,000. The ADP figures come ahead of the U.S. Labor Department's more comprehensive non-farm payrolls report on Friday, which includes both public and private-sector employment. (Reuters)

Europe

Eurozone March Retail Sales Weaker than Expected. Eurozone retail sales were weaker than expected in March, data showed on Wednesday, turning negative on a monthly basis for the first time since last September. The European Union's statistics office Eurostat said retail sales in the 19 countries sharing the euro fell 0.8% month-on-month for a 1.6% year-on-year rise. Economists had expected only a 0.7% monthly fall and a 2.4% annual increase. A 2.7% monthly drop in the volume of automotive fuel seemed to have the biggest downward impact on the headline number, followed by a 0.8% decline in the volume of sales of non-food products. Retail sales in the eurozone's biggest economy Germany fell 2.3% month-on-month in March and were 0.3% lower in the second biggest France. (Reuters)

Eurozone Business Activity Starts Second-Quarter on Solid Footing. Eurozone businesses started the second quarter with healthy growth as a buoyant order book again encouraged them to hire more, a survey showed on Wednesday. Markit's final composite Purchasing Managers' Index, seen as a good guide to growth, was 53.9 in April, ahead of an earlier flash reading of 53.5 but just behind March's 11-month high of 54.0. A reading above 50 implies growth. "The fact that the rate of growth failed to gain further momentum is a disappointment, but the national growth variations will give policymakers some real encouragement that the economic health of the region is improving," said Chris Williamson, Markit's chief economist. (Reuters)

Greek Unemployment Eases to 25.4% in February. Greece's jobless rate dropped slightly to 25.4% in February from a downwardly revised 25.6% rate in the previous month, statistics agency Elstat said on Wednesday. February's reading, based on seasonally adjusted data, is the lowest since July 2012 when unemployment stood at 25.3%. The jobless rate hit a record high of 27.9% in September 2013. Unemployment has come down from record highs as the economy stabilized last year after a severe slump, but remains more than double the euro zone's average of 11.3% in February. Greece's economy grew 0.7% last year. (Reuters)

Currencies

Dollar Plunges against Euro on Rising European Yields. The U.S. dollar hit its lowest level against the euro since late February on Wednesday after a rise in European yields drove demand for the euro and weak U.S. data supported expectations that the Federal Reserve will delay hiking interest rates. European yields continued to climb, with 10-year German bund yields hitting their highest levels of the year at 0.6%. The euro rose over 1.5% against the greenback and hit $1.13710, its highest level in roughly 10 weeks. The yield gap between U.S. 10-year Treasury yields and their German counterpart shrank to about 165 basis points, the narrowest since late March, making the euro more attractive to investors chasing yields. The dollar hit its lowest level against the Swiss franc in over three months at 0.91140 franc. The dollar index was on track for its biggest one-day decline in nearly seven weeks. The dollar index was last down 1% at 94.116. The dollar hit a nearly one-week low against the Japanese yen of 119.205 yen. (Reuters)

Commodities

Oil Hits 2015 Peak after First U.S. Crude Drawdown since January. Oil prices hit 2015 peaks on Wednesday amid the first drawdown in U.S. crude inventories since January, before settling off their highs as investors and traders moved to take profits on a multi-week rally. The dollar's tumble had also fed the run-up in oil and other commodities, as those raw materials became more affordable for holders of the euro and other currencies. U.S. crude futures rallied more than $2 to the year's high of $62.58 a barrel, before settling just 53 cents higher at $60.93. Futures of North Sea Brent reached a 2015 peak of $69.63 before turning negative at one point. It settled up 25 cents at $67.77. (Reuters)

Gold Down as Strong U.S. Yields Offset Weaker Dollar. Gold edged down on Wednesday, as the impact of higher U.S. real yields counteracted the effects of a sharply weaker dollar, soft U.S. data and doubts the Federal Reserve will raise interest rates at its June meeting. Spot gold was down 0.2% at $1,190.01 an ounce by 1910 GMT. Gold, which pays no interest, was under pressure from a two-month high in the benchmark 10-year U.S. Treasury yield. Silver was down 0.4% at $16.46 an ounce. Platinum fell 0.4% at $1,138 an ounce, while palladium was down 0.1% at $788.75 an ounce. (Reuters)