Global

Congress Victory Moves Obama's Pacific Trade Pact Forward. Legislation vital to securing the largest U.S. trade deal in decades, the Trans-Pacific Partnership, was passed by the Senate on Wednesday by a comfortable margin, advancing President Barack Obama's efforts to strengthen U.S. economic ties around the Pacific Rim. After a six-week congressional battle including two brushes with failure, some fancy legislative footwork and myriad backroom deals to keep the legislation alive, the Senate voted 60 to 38 to grant Obama "fast-track" power to negotiate trade deals and speed them through Congress. The bill next goes to the president for his signature. (Reuters)

Offshore Tax Zones Cost Developing Countries $100 Billion a Year. Developing countries are losing around $100 billion a year in revenues because foreign investors are channeling profits through offshore zones to avoid tax, a study by U.N. think-tank UNCTAD said on Wednesday. The economic and trade body published the $100 billion figure in its annual World Investment Report, which analyses how much foreign direct investment (FDI) is flowing across borders in search of corporate takeovers and start-up ventures. It calculated the amount by applying an average tax rate of just over 20% to around $450 billion of corporate profits shifted out of developing economies every year. (Reuters)

Malaysia

Leading Index Down 0.6% in April. The Leading Index, an advance indicator of economic performance, showed a decrease of 0.6% in April 2015 to 118.6 points from 119.3 points in the previous month. Three out of seven components of the index recorded decreases led by Real Money Supply down 0.4%, followed by Real Imports of Semi-Conductors and Number of Housing Units Approved, both down by 0.2%. The annual change in the index declined to 0.9% from 2.8% recorded in the preceding month. The Coincident Index, which measures current economic activity, decreased 1.1% in the reference month. (Dept. of Statistics)

Malaysia Said to Achieve Net Investment Inflows this Year. Malaysia is expected to achieve a modest increase in net investment inflows this year or maintain the level achieved last year, driven by sustained investors' confidence. Minister of International Trade and Industry, Datuk Seri Mustapa Mohamed, said the trend for the first quarter seemed to support the projection with a higher gross foreign direct investment (FDI) of RM28.73 million from RM26.01 million in the first quarter last year. (Bernama)

Asia

South Korea Supplementary MERS Budget to Top $9 Billion. South Korea will draw up a supplementary budget expected to exceed 10 trillion won ($9 billion), to help cope with the effects of the outbreak of Middle East Respiratory Syndrome and an economic slump, a ruling party official said on Wednesday. "The government has told us 5 trillion won of the budget will be used to make up for tax deficits, while 5 trillion and some more will be for extra spending," Saenuri Party floor leader Yoo Seong-min told reporters after a party meeting. (Reuters)

Indonesia’s Central Bank Relaxes Borrowing Rules. Indonesia's central bank, hoping to spur economic growth, has reduced the minimum downpayments consumers have to pay for cars and motorcycles while increasing the percentage of a home price that a buyer can borrow. A new regulation loosening rules for automotive and mortgage lending took effect on June 18, it said on Wednesday. "Our economy is slowing... Bank Indonesia wants to contribute to encouraging credit growth while staying prudent," said Yati Kurniati, its director of macroprudential department, told a media briefing. (Reuters)

Vietnam H1 GDP Grows 6.1%. Vietnam's economy in the first half of 2015 grew 6.1% from the same time last year, state media reported on Wednesday, citing Planning and Investment ministry data. The country's index industrial production increased an estimated 9.6% from the same period last year, the financial news website cafef.vn reported, referring to ministry data obtained prior to official release. (Reuters)

USA

U.S. First-Quarter GDP Revised to 0.2% Contraction. The economic slowdown early this year was less severe than previously estimated, putting the U.S. on a trajectory for stronger growth. GDP contracted at a 0.2% seasonally adjusted annual rate in the first quarter, the Commerce Department said Wednesday. The agency previously estimated output fell 0.7%. The revision showed consumer spending was stronger than previously estimated and that firms stocked up more on inventory. Consumer spending, representing more than two-thirds of economic output, grew at a 2.1% rate, replacing the previous estimate of 1.8%. (The Wall Street Journal)

U.S. Mortgage Applications Rise in Latest Week. Applications for U.S. home mortgages rose last week as interest rates dipped, 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 1.6% in the week ended June 19. The MBA's seasonally adjusted index of refinancing applications rose 1.8%, while the gauge of loan requests for home purchases, a leading indicator of home sales, rose 1.2%. (Reuters)

Europe

German Business Confidence Falls. German business confidence fell for a second month in a sign of concern that the ripples from any Greek debt default would reach Europe’s largest economy. The Ifo institute’s business climate index dropped to 107.4 in June from 108.5 in May. The median estimate was for a decline to to 108.1, according to a survey of 40 economists. Ifo’s measure of current conditions fell to 113.1 in June from 114.3 in May, the survey showed. A gauge of expectations dropped to 102 from 103. (Bloomberg)

France Confirms 0.6% GDP Growth. France's GDP in the first quarter grew by 0.6% after a rise in corporate profit margins and strong household spending, official figures show. The increase was in line with a preliminary estimate by the French statistics office. Corporate profit margins rose to 31.1%, the highest since the first quarter of 2011, after a cut in payroll tax. The official figures by INSEE were a further sign of economy recovery, Finance Minister Michel Sapin said. The French economy saw roughly 0.4% growth in 2013 and 2014. (BBC)

Spain Sees GDP Reaching Pre-Crisis Level by End-2016. Spain's economy grew at close to 4% in the first half of 2015, putting it on course to return to pre-crisis levels of output by the end of next year, Economy Minister Luis de Guindos said on Wednesday. Gross domestic product fell around 8% between the first quarter of 2008 and the second quarter of 2013, when it began emerging from a long downturn, and the extent of that recovery will be pivotal in a national election due in November. (Reuters)

Currencies

Dollar Inches Lower after Rally. The dollar drifted lower on Wednesday after hitting its highest in more than a week in the previous session, while U.S. 10-year Treasury yields dipped as investors' focus slowly shifted from Greece to prospects for higher U.S. interest rates. In late New York trading, the dollar index was down 0.1% at 95.302. News of the remaining differences between Greece and its eurozone creditors pulled the euro off highs hit earlier in the day. It was still up 0.2% at $1.1196 in late afternoon trading. Against the yen, the dollar was down 0.1% at 123.86 yen. (Reuters)

Commodities

Oil Slides after Big U.S. Gasoline Build Offsets Crude Draw. Crude oil futures settled down more than 1% on Wednesday after a government report showing an eighth straight weekly drop in U.S. crude stockpiles was offset by a large build in refined products. Uncertainties about progress in the Greek debt crisis added to the energy market's skittishness, even as support emerged from roadblocks to an Iranian nuclear deal aimed at allowing Tehran to resume oil exports without restrictions. Brent futures settled down 96 cents, or 1.5%, at $63.49 a barrel. U.S. crude ended down 74 cents, or 1.2%, at $60.27. (Reuters)

Gold Slips to 2-Week Low. Gold fell for the fourth straight session to a two-week low on Wednesday as the dollar pared earlier losses versus the euro and traders awaited news on Greece's negotiations with its international lenders to avoid default. Gold edged higher in earlier trade as both stocks and the dollar retreated, but failed to maintain momentum as those assets recovered from lows. Spot gold was down 0.3% at $1,174.20 an ounce at 1905 GMT. Silver was up 0.8% at $15.89 an ounce. Spot platinum was up 0.4% at $1,069.50 an ounce, while spot palladium was down 0.1% at $693.25 an ounce. (Reuters)

Source: Kenanga Research - 25 Jun 2015