Malaysia

Malaysia Escapes Fitch Downgrade. Fitch Ratings maintained Malaysia’s credit ranking at the fourth-lowest investment grade after signaling a downgrade earlier this year, saying the country’s finances are improving and growth remains steady. The outlook on the nation’s A- grade was revised to stable from negative. A new consumption tax and fuel subsidy reforms are supportive of Malaysia’s finances even as federal government debt and explicit guarantees continue to increase, Fitch said in a statement Tuesday. The ratings agency forecasts a further narrowing of the deficit is 2015 despite lower oil prices. (Bloomberg) – refer to Economic Viewpoint: Ringgit Outlook for further comments.

Petrol Prices Increase Effective July 1. The retail price of RON95 petrol has increased by 10 sen and RON97 by 20 sen a litre for the month of July. However, the price of diesel remained unchanged at RM2.05 a litre. The new price for RON95 is RM2.15 a litre, and RON97 is RM2.55 a litre. (The Edge)

Asia

Tankan Survey Shows Optimism among Japan Big Manufacturers. Confidence at big Japanese manufacturers unexpectedly improved in the three months to June and is seen rising further ahead, a closely watched central bank survey showed. The headline index for big manufacturers' sentiment rose from three months earlier to plus 15 in June, the Bank of Japan's quarterly "tankan" survey showed on Wednesday. That compared with the median estimate of plus 12 in a poll of economists. Big firms plan to raise capital expenditures by 9.3% in the fiscal year from April 1, the survey showed. The tankan's sentiment indexes are derived by subtracting the number of respondents who say conditions are poor from those who say they are good. A positive reading means optimists outnumber pessimists. (Reuters)

Flash PMI Data Shows Contraction in Japan and China Factory Activity. Factory activity in Japan and China contracted in June in continued worries for the largest economies in Asia. The HSBC flash China manufacturing purchasing managers' index (PMI) improved to 49.6 in June from 49.2 in May but was still below the reading of 50 that separates growth from contraction. Meanwhile, the flash Japan PMI plunged to 49.9 in June from 50.9 in May, as domestic demand declined significantly. (IBT)

Thai May Indicators Show Economy Remains Fragile. Thailand released weak May factory output data and tepid investment and consumption indexes that provide fresh indications the economy is not out of a rut. The Industry Ministry said on Tuesday that May output dropped 7.6% from a year earlier, the largest fall since March 2014. A market poll forecast a 4.8% decline. Over the past two years, Thailand's factory production index has fallen every month, except in February, on a yearly basis. The Bank of Thailand (BOT) unveiled May numbers that included a 1.3% rise from April for its private consumption index but a 0.5% slip in private investment. (Reuters)

South Korean Exports Hurt More by Torpid Global Economy than Weak Yen. South Korea's exports have been hurt more by sluggish global demand than by a weak Japanese yen, the central bank said on Tuesday, though shippers face downside risks should Japanese companies begin an aggressive push to take more market share. "With the exception of cars, machinery and steel where competition is strongest between South Korean and Japanese exporters, the influence of the weak yen has been small," said the Bank of Korea in a biannual report on financial stability. (Reuters)

USA

Home Prices in 20 U.S. Cities Grew at Slower Pace in April. Home prices in 20 U.S. cities rose at a slower pace than projected in April, indicating the market was experiencing uneven gains as it entered the busier selling season. The S&P/Case-Shiller index of property values increased 4.9% from April 2014 after climbing 5% in the year ended in March, the group said Tuesday in New York. The median estimate of 31 economists called for a 5.5% advance. All 20 cities in the index showed a year-over-year gain, led by a 10.3% increase in Denver. Prices climbed 10% in San Francisco. (Bloomberg)

U.S. Consumer Confidence Rises. U.S. consumer confidence increased solidly in June, with households upbeat about the labor market, supporting views the economy was back on firmer footing after wobbling at the start of the year. The rise in confidence came despite moderate increases in gasoline prices. The Conference Board said its index of consumer attitudes rose to a reading of 101.4 this month from 94.6 in May. The survey showed households growing more bullish about the jobs market. The share of people saying jobs are hard-to-get fell to 25.7% from 27.2% in May. The ranks of those viewing jobs as "plentiful" increased to 21.4% in June from 20.6% the prior month. (Reuters)

Europe

Eurozone Inflation Softens in June on Energy Dip. Eurozone inflation softened in June, moving away from the European Central Bank's target as energy costs weakened and the price rises of food and services eased after a spike in May. The European Union's statistics office Eurostat said on Tuesday that consumer prices in the 19 countries sharing the euro rose by 0.2% year-on-year in June from a 0.3% increase in May. The figure was in line with expectations. Excluding volatile energy prices, consumer prices rose 0.9%. (Reuters)

German Unemployment Falls for Ninth Straight Month. German unemployment fell in June, with the jobless rate holding steady at a record low of 6.4% for the fourth straight month. The Federal Labour Office reported on Tuesday that the seasonally-adjusted unemployment total dipped by 1,000 to 2.786 million. That is the lowest level since German reunification in 1990. The drop was slightly smaller than expected. Economists had been forecasting a drop of 5,000. (Reuters)

U.K. First Quarter GDP Revised Up to 0.4%. Britain’s economy had more momentum than previously estimated in the first quarter. Gross domestic product rose 0.4%, the Office for National Statistics said in London on Tuesday, revising its previous figure of 0.3%. A separate report showed the current account deficit narrowed to 26.5 billion pounds, or 5.8% of GDP. The economy has grown for nine straight quarters, helped largely by domestic demand, though the recovery remains uneven with net trade continuing to act as a drag. (Bloomberg)

U.K. Consumer Confidence Jumps to Highest in 15 Years. U.K. consumer confidence got a post-election bounce this month, rising to its highest level in more than 15 years, according to GfK. The company said on Tuesday that its sentiment index jumped 6 points in June to 7. That’s the best reading since January 2000. The sub components in the gauge, measuring everything from consumers’ view of their finances to willingness to splash out on big-ticket items, also increased. (Bloomberg)

Currencies

Euro Burdened by Greece, Uncertainty High. The euro remained on the defensive in Asia on Wednesday as Greece became the first developed economy to default on a loan with the IMF, setting the scene for another day of uneasy action in markets. The euro was just a shade lower in early trade at $1.1128, having dipped 0.8% on Tuesday. Activity was light across the currency market with the U.S. dollar index drifting up to 95.529 from Tuesday's low of 94.847. Against the yen, the dollar stood at 122.42, near a five-week low of 121.93 plumbed overnight. (Reuters)

Commodities

Oil Bounces Off Three-Week Lows. Oil prices ended higher as it rebounded from three-week lows on Tuesday with U.S. refined fuel trading leading the rally on bets for strong summer demand, even as Greece's move toward a debt default threatened to jolt global markets. The run-up in oil also jarred with the stronger dollar, which normally tends to weigh on commodities. Brent crude settled up $1.58, or 2.6%, at $63.59 a barrel. It fell 3% for June, rose 15% for its best quarter since September 2012, and finished up 11% for the half year. U.S. crude settled up $1.14, or almost 2%, at $59.47. It slipped 1% on the month; jumped 25% in the second quarter for its best quarterly gain since December 2011, and closed up 12% on the year. (Reuters)

Gold Slips as Greek Crisis Knocks Euro. Gold prices fell on Tuesday as the prospect that Greece would default on a repayment to the International Monetary Fund knocked the euro against the dollar, and as investors remained wary over the metal's longer-term prospects. Spot gold fell 1.2% to the lowest since June 5 at $1,166.35 an ounce, but was down 0.7% at $1,171.05 at 1858 GMT. It was on track to close the second quarter down 1%, its fourth straight quarterly fall. Silver pared losses after falling 2.2% to the lowest since mid-March at $15.40 an ounce. Platinum was down 0.3% at $1,074.24 an ounce, and palladium was up 0.9% after falling to a two-year low at $661.34 an ounce. (Reuters)