Malaysia

Malaysian Q2 Retail Sales Fall on GST, Ringgit. Malaysian retail sales fell 11.9% in the second quarter, from a year earlier, as the combined impact of the GST and weaker ringgit hit sentiment, Retail Group Malaysia (RGM) said. In a statement today, RGM said it downgraded its 2015 full-year retail sales growth forecast to 3.1%, from 4.0% previously, following the Q2 data. RGM said that the latest quarterly result was the worst since the Asian financial and economic crisis in 1998. The negative impact of GST on Malaysia's retail industry is worse than anticipated. The weak ringgit is affecting costs of goods, and higher retail prices will be more apparent by the fourth quarter of this year. (The Edge Markets)

Malaysia’s Economy in Stronger Position to Meet Any Incoming Storms - Najib. The Malaysian economy is in a stronger position than it was during the 1997 Asian Financial Crisis to bear any "incoming storms", Prime Minister Najib Razak said on Thursday. He said that local companies now have stronger balance sheets and governance, while structural reforms to the financial and banking sector has strengthened it against intense bouts of volatility. Najib also said Malaysia is on track to achieve the goal of becoming a high income status nation by 2020. (Reuters)

Asia

Japan Services Expand at Fastest Pace in Almost Two Years. Activity in Japan's services sector expanded at the fastest pace in almost two years in August, a survey showed on Thursday, as companies turned more optimistic on business conditions. The Markit/Nikkei Japan Services Purchasing Managers Index (PMI) rose to a seasonally adjusted 53.7 from 51.2 in July to reach the highest since October 2013. The index remained above the 50 threshold that separates expansion from contraction for the fifth consecutive month. (Reuters)

BOJ's Kiuchi Warns Japan Won't Hit Inflation Goal. Japan is unlikely to see inflation hit the central bank's 2% target over the next 2.5 years as consumer spending remains weak and China's slowdown hurts exports, Bank of Japan board member Takahide Kiuchi said on Thursday. He also warned that Asian economies may see growth slow significantly as China suffers from huge slack and U.S. consumer spending remains soft. He added that Japan's economy will rebound only modestly ahead given sluggish exports to Asia. (Reuters)

Thai Consumer Confidence Sinks. Thai consumer confidence fell for the eighth successive month in August to a 15-month low, as weak exports and a deadly bomb blast in the capital Bangkok hold back economic recovery, a university survey showed on Thursday. The consumer confidence index of the University of the Thai Chamber of Commerce dropped to 72.3 in August from 73.4 in July. The reading was the lowest since May 2014, when the army seized power. (Reuters)

South Korea Revised Q2 GDP up 0.3% on Quarter. South Korea's economy grew a seasonally adjusted 0.3% during the April-June quarter from the previous three-month period, revised central bank data showed on Thursday, unchanged from its earlier estimate. Over a year earlier, South Korea's GDP expanded by 2.2% in the second quarter, the Bank of Korea data showed. It was the worst quarterly growth in more than six years for South Korea and less than half the 0.8% expansion during the January-March period. (Reuters)

Aussie Retail Sales Unexpectedly Falls. Australian retail sales unexpectedly fell in July, the first drop since May 2014, as highly-indebted consumers put away their pocketbooks. Sales declined 0.1% from a month earlier, government data showed Thursday. The result compares with the median estimate in a survey of 26 economists for a 0.4% gain. None predicted a drop. The data corresponds with a rise in the household savings rate and suggests little improvement in the economy at the start of the third quarter. (Bloomberg)

USA

Services Firms Expand Rapidly. U.S. services companies expanded at a healthy pace in August, lifted by robust consumer spending resulting from steady job gains. The Institute for Supply Management said Thursday that its services index slipped to 59 from 60.3 in the previous month. The index remains at a high level despite the decline and suggests that Americans have been spending freely at retail stores, hotels, restaurants and other firms that make up the index. A measure of sales and production fell one point but remained at a solid level of 63.9 in August. Hiring also expanded, though at a much slower pace. The survey's measure of job gains fell to 56 from 59.3. (AP)

Jobless Claims Rise by 12,000. The number of Americans seeking first-time unemployment benefits rose last week, though the overall level remained consistent with steady job creation. Initial jobless claims, a proxy for layoffs across the U.S., increased by 12,000 to a seasonally adjusted 282,000 in the week ended Aug. 29, the Labor Department said Thursday. That was the fifth rise in six weeks and the highest level since the start of July. WSJ)

Trade Deficit Drops to $41.9 Billion in July. The U.S. trade deficit fell in July to the lowest level in five months as exports posted a small gain while imports declined, reflecting a big drop in shipments of consumer goods such as cell phones. The deficit narrowed to $41.9 billion in July, a 7.4% decline from a June imbalance of $45.2 billion, the Commerce Department reported Thursday. Exports were up a small 0.4% to $188.5 billion, helped by stronger sales of U.S.-made autos and machinery, while imports declined 1.1% to $230.4 billion. (AP)

Europe

Eurozone August Business Growth at Four-Year High. Eurozone business activity accelerated at its fastest pace in more than four years last month as Italy turned in its best performance since early 2011 and German growth strengthened, surveys showed on Thursday. However, those surveys still only point to modest third-quarter GDP growth. Markit's final August Composite Purchasing Managers' Index (PMI) beat an earlier estimate of 54.1, settling at 54.3 – its highest level since May 2011. In July it registered 53.9 and has now been above 50 since July 2013. The PMI for the bloc's dominant service industry rose to 54.4 from July's 54.0. (Reuters)

U.K. Services Growth Slows to Lowest Since 2013. U.K. services grew at the weakest pace in more than two years in August, underscoring signs the economy is slowing in the third quarter. An index of activity dropped to 55.6 from 57.4 in July, Markit Economics said on Thursday. It’s the lowest reading since May 2013 and compares with a prediction of 57.7 in a survey of economists. An index of new orders dropped to a 28-month low. (Bloomberg)

Eurozone Retail Sales up 0.4% in July. Retail sales across the 19-country Eurozone rose by a solid 0.4% in July from the month before. The increase reported by the European Union's statistics agency, Eurostat, was more or less in line with market expectations and more than made up for the 0.2% decline recorded in June. The July figures also provide further evidence that the Eurozone economy held up during a month when fears of a Greek exit from the euro were at their most acute. (AP)

Currencies

Euro Losses Top 1% as Eurozone Prospects Dim. The euro fell more than 1% on Thursday, after European central bankers cut economic growth targets and left interest rates unchanged. During Draghi's news conference, the euro dropped 1.4% against the dollar to touch a two-week low of $1.1108. It was last off 0.90% at $1.1122. The euro also sank against the yen and was last down 1.1% at 133.48 yen. The greenback was also up against most other major currencies, with the dollar index last ahead 0.60%. The dollar declined 0.20% against the yen to 120.09 yen. (Reuters)

Ringgit Falls on Concern Data to Show Reserve Depletion. The ringgit extended the week’s losses on concern the erosion of Malaysia’s foreign-exchange reserves will further hurt investor sentiment in an economy reeling from falling oil prices. The reserve holdings have fallen 19% this year to US$94.5 billion (RM398.781 billion) and data tomorrow for the last two weeks of August may show the extent of central bank ringgit purchases to prop up Asia’s worst-performing currency this year. The ringgit last stood at 4.2485 a dollar on Thursday. (Bloomberg)

Commodities

Oil up Modestly on Volatile Wall Street. Oil prices inched higher on Thursday in see-saw trade, tracking gains in Wall Street equities for a second straight day despite a weekly build in U.S. crude inventories that weighed on the outlook for oil. Brent settled up 18 cents at $50.68 a barrel. At one point during the session it had risen above $52. U.S. crude gained 50 cents, settling at $46.75. It went above $48 earlier. On Friday, the market will also watch the U.S. oil rig count for direction. (Reuters)

Gold Slips on Dollar After ECB Comments. Gold fell 1.0% on Thursday as the dollar jumped versus the euro after the European Central Bank (ECB) cut inflation forecasts, while a U.S. jobs report that could provide clues on the timing of a Federal Reserve rate rise remained in focus. Spot gold fell as much as 1.1% to a session low of $1,121.35 an ounce and was down 0.8% at $1,125.20 at 1847 GMT. U.S. gold for December delivery settled down 0.8% at $1,124.50 an ounce. Other precious metals were also under pressure, with silver down 0.3% to $14.66 an ounce, platinum down 1% to $1,002 and palladium down 1.7% at $572.50. (Reuters)