Malaysia

Budget 2016 to Focus on Long-term Economic Prospects. The 2016 Budget will likely revolve around strategies to transform the country into a developed and high-income economy by 2020. The Budget proposals will include strategic measures to stimulate domestic demand following concerns over a challenging external environment next year, as well as, further compensate households from the introduction of the GST. And for this, most analysts expect Budget 2016 proposals to contain specific strategies for the medium to long-term, focusing on improving productivity, intellectual capital, skills, innovation and technology and, strengthen the country's underlying fundamentals. (Bernama)

Contributions from O&G Sector to GDP to Fall Further - Abdul Wahid. The contributions from the oil and gas (O&G) sector to the country's GDP are expected to fall further this year, in line with the nation's plan to diversify its economic structure. Minister in the Prime Minister's Department Datuk Seri Abdul Wahid Omar said last year, the sector's contributions to the country's revenue were reduced by 30%. He said the country's diversified economy was the source of its strength. Abdul Wahid said while 25% the country's exports were to ASEAN countries, the single largest export country was China, where it accounted for 14%. (Bernama)

MIER's Business Conditions Index Slips in Third Quarter. The Malaysian Institute of Economic Research (MIER) Business Conditions Index (BCI) for the third quarter continued its downtrend by 9.0 points to 86.4 points, versus 95.4 points in the previous quarter. In releasing the results Thursday, MIER said the component indices of manufacturing sales, new domestic orders, production and new export orders are the factors that weighed down the index. MIER said the drop below the 100-point threshold reflects signs of a contracting manufacturing sector. As at September 2015, the manufacturing sector remained in very low gear, due to sluggish final demand and ongoing inventory adjustments. (Bernama)

Asia

Korea’s Economy Rebounds from MERS Outbreak as Shoppers Return. South Korea’s economy rebounded in the third quarter as an outbreak of the Middle East Respiratory Syndrome receded and consumers ventured back to the shops, offsetting weakness in sales abroad. GDP expanded 1.2% from the three months through June, when it grew by only 0.3%, the Bank of Korea said Friday. Economists surveyed by Bloomberg had projected a 1% increase. GDP expanded by 2.6% from a year earlier. Policymakers including Finance Minister Choi Kyung Hwan and Bank of Korea cautioned that risks remain from weakness and uncertainties in overseas markets. (Bloomberg)

Jokowi Adjusts Tax Rules to Boost Local Firepower for Investment. Indonesia will make it cheaper for companies to revalue their assets to encourage investment and boost tax coffers, in the latest installment of a gathering economic reform program. The policy announcement came after the investment coordinating board released figures showing domestic and foreign investment in July through September climbed 17% in rupiah terms from a year earlier. Companies that revalue their property assets before the end of the year will pay a tax rate of 3%, down from 10% currently, Finance Minister Bambang Brodjonegoro said. (Bloomberg)

Moody's Says Japan QQE Unlikely to Meet Target in Timeframe. The Bank of Japan’s quantitative and qualitative easing program is unlikely to reach its target of boosting inflation to 2% next year, according to Moody’s Investors Service. “It would seem that the QQE program at the BOJ and the continued application of Abenomics has not changed mindsets,” Christian de Guzman, a senior analyst at Moody’s, said on Thursday. “Consumers continue to not spend, and corporates, despite very robust profitability, have not meaningfully increased their investment into Japan.” There may still be more room to further expand monetary easing, De Guzman said, although the “onus is now more on fiscal policy.” (Bloomberg)

China Says Outflows Normal, No Panic Capital Flight. Recent outflows of money from China are "normal" and not a sign of panic capital flight, a senior official at the foreign exchange regulator said on Thursday, downplaying fears over growing outflows as the economy slows. China is confident in keeping international payments and receipts balanced in the future thanks to a positive economic outlook, Wang Xiaoyi, deputy head of the State Administration of Foreign Exchange (SAFE) told a news conference. The main reasons for recent outflows were a greater willingness by companies and individuals to hold foreign exchange, and moves by firms which were adjusting their foreign debt structures and increasing investment abroad, Wang said. (Reuters)

Americas

Applications for US Weekly Jobless Benefits Rose Last Week. The number of Americans seeking unemployment benefits rose slightly last week but the four-week average declined to the lowest level in more than four decades, another sign the job market is healthy. The number of people applying for benefits edged up by 3,000 last week to 259,000 after two weeks of declines, the Labor Department said Thursday. The four-week average for benefit applications fell by 2,000 to 263,250, the lowest level since December 1973. Monthly job growth has averaged a mediocre 167,000 in the July-September quarter, down from 231,000 in the April-June period. (AP)

U.S. Existing Home Sales Surge in September. Sales of previously owned homes swung to a big increase in September, putting the market back on track for its strongest year since 2007. Existing-home sales climbed 4.7% last month to a

seasonally adjusted annual rate of 5.55 million, the National Association of Realtors said on Thursday, just shy of the post-recession high touched in July. The September increase puts the market on pace for its best year since before the recession. (WSJ)

Mexico Consumer Inflation Hits Another Record Low in Early October. Mexico's annual inflation cooled to a record low in early October, showing little sign of a big impact from a sharply weaker peso that could pressure policymakers to lift interest rates. Inflation in the 12 months through mid-October fell to 2.47% from 2.51% in the second half of September, the national statistics institute said on Thursday. The rate was the lowest reading for the first half of a month since 1989, as far back as data goes on the institute's website. A poll of analysts forecast a rate of 2.51%. (Reuters)

Europe

ECB Keeps Rates on Hold, Seen Opening Door to More Easing. The European Central Bank kept its interest rates unchanged on Thursday but President Mario Draghi was likely to keep the door open at a press conference for more monetary stimulus to tackle falling inflation. While stressing their readiness to act, the bank's policymakers have said the fall in prices is largely due to energy costs, which the ECB cannot influence, and that it is unclear whether a slowdown in emerging economies will have a lasting impact on the Eurozone. Their cautious tone suggests the ECB will wait until it gets new inflation forecasts in December before deciding on any change to its QE scheme. (Reuters)

ECB Says Increase to Stimulus to be Considered in December. European Central Bank head Mario Draghi says the bank will need to look at expanding monetary stimulus at its December meeting in order to raise inflation and boost the Eurozone’s spotty economic recovery. That could be an occasion to increase or extend the current 1.1 trillion euro ($1.2 trillion) stimulus program or to take other new and unspecified measures. Draghi reiterated that the stimulus effort, consisting of monthly bond purchases of 60 billion euros, would continue at least through September, and longer if needed. (AP)

U.K. Retail Sales Rise in September. The Rugby World Cup drove retailers in the U.K. to have a bumper September, official figures showed Thursday, lifting the economy's growth prospects during the third quarter amid earlier signs of weaker activity elsewhere. U.K. retail sales volumes rose 1.9% on the month, the Office for National Statistics said, the largest increase in almost two years. Sales grew 6.5% YoY. This was much stronger than economists polled were expecting. Average store prices dropped by an annual 3.6% in September, matching a record dip seen in February which was driven by falling oil prices. (Dow Jones)

Risks to German Economy Rise Due to Weaker China, VW. The risks to German industry have risen due to the economic slowdown in China and other emerging markets and uncertainty generated by the Volkswagen emissions scandal, the Finance Ministry said. In its October monthly report, the ministry said on Thursday that economic indicators pointed to a temporary slowdown in manufacturing and foreign trade in the third quarter. In its report, the Finance Ministry said domestic demand, especially private consumption, is the most important driver of the moderate growth in the German economy. (Reuters)

French Business Confidence Climbs to Four-Year High on Services. French business confidence climbed to a four-year high as demand for services and retail sales helped support the recovery in Europe’s second-largest economy. An index of sentiment among executives in services, retail, industry and construction rose to 101 in October from 100 in the past two months, national statistics office Insee said on Thursday. That’s its highest reading since Aug. 2011. The finance ministry and the European Commission both predict full-year growth of about 1% in 2015. (Bloomberg)

Spanish Unemployment Rate Falls to Lowest Level since 2011. Spanish unemployment fell to the lowest since 2011 in the third quarter, boosting Prime Minister Mariano Rajoy’s campaign ahead of an election pegged to jobs. The jobless rate dropped to 21.2% from 22.4% the previous quarter, the Madrid-based National Statistics Institute said Thursday. Despite the improvement, Spain still has the second-highest unemployment rate in the Euro area behind Greece. A surge in temporary hiring saw the Spanish economy add 182,200 new jobs in the three months to September. Over the past year, the country has created more than half a million posts. (Bloomberg)

Greece to Receive 3 Billion Euro Aid Tranche: EU's Moscovici. Reforms carried out by the Greek government are on track and its creditors will disburse the next 3 billion euro ($3.4 billion) installment of its aid program, European Economics Commissioner Pierre Moscovici told French radio on Thursday. "And in the course of November, December, we will deal with the issue of the recapitalization of Greek banks and Greek debt," he said. "The Greek situation is on track as long as everyone plays their part, which means carrying on with reforms for the Greek government, and having a constructive attitude for its partners.” (Reuters)

Currencies

Euro Continues Fall on ECB President's Dovish Tone. The euro sank to its lowest level against the dollar in four weeks on Thursday, pushed lower after European Central Bank President Mario Draghi signaled that new stimulus measures could come as early as December. In late trading, the Eurozone's single currency traded at US dollar 1.1111, down 2%. Earlier it fell to a four-week low of $1.1108. Against the yen, the euro last traded at 134.09, down 1.4%, the euro's largest one-day fall since March. The dollar rallied sharply on the ECB news, pushing up 1.5% against Swiss franc at 0.9713 franc, and rising 0.6% against the yen to 120.67 yen. (Reuters)

Indonesia's Rupiah Gains Most in Asia on Inflows before Stimulus. The rupiah rose the most in Asia after foreign funds added to their stock and bond holdings amid speculation Indonesia’s economy is picking up and the Federal Reserve won’t raise interest rates this year. Overseas pumped 2.67 trillion rupiah ($196 million) into local-currency sovereign debt in the first three days of the week, the latest available data show. President Joko Widodo is set to announce a fifth policy package to shore up the economy on Thursday. The rupiah snapped a four-day declining streak to gain 0.5% to 13,655 a dollar in Jakarta, prices from local banks show. (Bloomberg)

Commodities

Oil Retraces Early Gains. Oil gave back most of its gains to trade flat on Thursday as worries about high U.S. crude inventories offset early support from a gasoline rally and technical charts calling for higher prices. A two-week high in the dollar also weighed on crude. Brent was down one penny at $47.84 a barrel by 1742 GMT. The global crude benchmark finished down $0.86, or 1.8%, on Wednesday, hitting an October low of $47.50. U.S. crude slipped $0.10 to $45.10. It settled down $1.09, or 2.4%, in the previous session, falling to a three-week low of $44.86. (Reuters)

Gold Down on Dollar; U.S. Rate Hike Still Eyed. Gold prices fell for a second straight day on Thursday, hitting a nine-day low, pressured by a strong dollar and uncertainty over the timing of a U.S. rate hike. The spot price of gold was down 0.1% at $1,165.05 an ounce by 2039 GMT, after touching a new low since October 13 at $1,162.50. U.S. gold for December delivery settled down $1 at $1,166.10. Silver was up 0.7% at $15.79 an ounce after data showing China imported 338 tonnes of silver in September, up 39% YoY. Platinum rose 0.6% to $1,005.75 an ounce. Palladium also gained 1.6% to $682.97 per ounce. (Reuters)