Global

Global Semiconductor Sales to Grow at Modest Pace in 2016. The US-based Semiconductor Industry Association (SIA) expects the global chip industry to grow at a modest pace across all regions. It endorsed the World Semiconductor Trade Statistics (WSTS) organisation’s global semiconductor sales forecast of a 3.4% growth for 2016 (US$358.9bil in total sales) and 3% growth for 2017 (US$369.6bil). (The Star)

Malaysia

MoF-Fitch Meeting Reaps Positive Outcome. Treasury Secretary-General Tan Sri Mohd Irwan Serigar Abdullah opined that Fitch Ratings, which had warned of a more than 50% chance of a downgrade in Malaysia's rating in the future, could have changed their perceptions of the country following a meeting with Finance Ministry officials early this week. "I can say I've changed (their minds), but it all depends," he told reporters Thursday Irwan said Fitch Ratings, which has affirmed Malaysia's A- rating with a negative outlook, is expected to come out with the latest round of its review within a month. "I think they're (Fitch Ratings) happy during the wrap up yesterday. They look positively on the economy and growth, government 5-year plan and fiscal rationalisation, everything... they're happy," he noted. (The Sun)

Asia

Singapore’s Worst Souring Loans Since 2009. Singapore’s worst souring loans in six years are adding to signs Southeast Asian borrowers are buckling under pressure from slowing Chinese economic growth and rising U.S. interest rates. Banks in Southeast Asia’s biggest finance center have placed 2.3% of their lending books in a “special mention” category, the first signal that a company may struggle to repay, the highest since 2009. Thai banks have allocated 2.8%, the worst in four-and-a-half years, while Indonesia has the most non-performing loans since the start of 2012. “We’re coming out of a period when credit conditions were quite favorable for Asean and the cycle is beginning to turn,” said Gene Fang, a managing director at Moody’s Investors Service in Singapore. (Bloomberg)

USA

U.S. Productivity Fell in Q1 while Labor Costs Up. U.S. worker productivity declined more sharply in the first three months of the year than previously thought while labor costs rose more quickly. Productivity fell at a 3.1% rate in the first quarter, a bigger drop than the 1.9% decline estimated a month ago, the Labor Department reported Thursday. Labor costs rose at a 6.7% rate in the first quarter, faster than 5% rise first estimated. For all of 2014, productivity grew by a modest 0.7%, even less than the 0.9% productivity gain in 2013. (AP)

 IMF Warns Fed Should Delay Rate Hike until 2016. The U.S. Federal Reserve should delay a rate hike until the first half of 2016 until there are signs of a pickup in wages and inflation, the International Monetary Fund said in its annual assessment of the economy on Thursday. "Based on the mission’s macroeconomic forecast, and barring upside surprises to growth and inflation, this would put lift-off into the first half of 2016," the fund said. "A later lift-off could imply a faster pace of rate increases following lift-off and may create a modest overshooting of inflation above the Fed’s medium-term goal (perhaps up toward 2.5%). However, deferring rate increases would provide valuable insurance against the risk of disinflation, policy reversal, and ending back at zero policy rates." (Reuters)

 Fed Doves' Ranks May Be Growing, Possibly Pushing Hike into 2016. Federal Reserve Chair Janet Yellen insisted only two weeks ago that the U.S. economy remained on a path that would allow the central bank to raise rates in 2015. Now however, some of her colleagues are suggesting it might be better to wait. Lael Brainard, a voting member of the Federal Open Markets Committee, signalled this week that it may be prudent to delay a rate rise. She was followed on Thursday by Daniel Tarullo, another voting member, who said data this year had so far failed to show a rebound from the first quarter. Long-time dove Charles Evans of the Chicago Fed suggested he might push his preferred timing for a first rate rise into the second half of 2016 from early next year, matching the view of his colleague, Narayana Kocherlakota at the Minneapolis Fed. (Reuters)

Europe

Greece Defers IMF Payment. Greece became the first country to defer a payment to the International Monetary Fund since the 1980s as its game of brinkmanship with creditors goes down to the wire. On Thursday, Greece told the IMF it would delay a debt payment of about $339 million (301 million euros) due Friday, submitting a request to the fund to bundle payments totaling about $1.7 billion due this month into one lump-sum payment. The latest proposal from its international creditors was rejected, with the Finance Ministry saying the plan “can’t solve the riddle” and an agreement requires “immediate convergence of the institutions to more realistic” proposals. (Bloomberg)

Currencies

Euro Gains on Yen but Rally Pauses against Dollar. The euro's rally against the dollar took a breather on Thursday but it touched a fresh five-month high against the yen, after the head of the European Central Bank played down the impact of higher market rates and triggered a spike in German yields. The euro climbed as far as $1.1285 on Wednesday, reaching its highest since May 19. The resurgent euro dragged down the dollar index, which slid to a near two-week low of 95.213 on Wednesday. The dollar firmed on the day against the yen, edging up about 0.2% to 124.47, not far from a 12-1/2-year peak of 125.07 scaled on Tuesday. (Reuters)

Indonesian Rupiah Hits 17-year Low. Indonesia's rupiah dropped to a 17-year low against the dollar on Thursday, pressured by slowing economic growth and high inflation in Southeast Asia's largest economy. The rupiah fell 0.4% to 13,271 against the dollar, the weakest level since August 1998 when Indonesia was in the depths of a financial crisis that led to the ouster of autocratic leader Suharto. The central bank earlier on Thursday said it stood ready to intervene in the foreign exchange and bond markets to ensure stability. (Reuters)

Commodities

Oil Tumbles Again Before OPEC. Crude prices tumbled almost 3% for a second day on Thursday ahead of an OPEC decision likely to keep the market oversupplied and on worry rising European bond yields could tighten the speculative money swirling in oil. The Organization of the Petroleum Exporting Countries, meeting in Vienna, is expected to affirm on Friday an output target of 30 million barrels per day, ignoring calls from some producers to cut supply and support prices. OPEC actually produces about 2 million bpd above that. Brent crude settled down $1.77, or 2.8%, at $62.03 a barrel. U.S. crude futures also settled down 2.8%, or $1.64, at $58 a barrel. (Reuters)

Gold Hits 5-Week Low as U.S. Data Offsets Weaker Dollar. Gold prices fell on Thursday, shrugging off early weakness in the U.S. dollar and hitting five-week lows as robust U.S. economic data fed expectations that the Federal Reserve could raise interest rates this year. Spot gold was down 0.8% at $1,175.53 an ounce at 1823 GMT, after falling to the lowest since May 1 at $1,172.55. U.S. gold futures for August delivery settled down $9.70 an ounce at $1,175.20. Silver was down 2.4% at $16.23 an ounce, after falling to the lowest since May 1 at $16.06. Platinum was down 0.7% at $1,096.99 an ounce while palladium was up 0.3% at $754 an ounce. (Reuters)