Asia
Asia Business Sentiment Up, Except In M'sia, Japan, Korea. Asia's top companies reported a bullish outlook in the second quarter of 2014 compared to the first three months despite worries over the global economy and rising costs, the latest ThomsonReuters/INSEAD Asia Business Sentiment Survey showed. Of the 124 companies who responded to the poll, none reported a negative outlook for the first time in the survey's history. The ThomsonReuters/INSEAD Asia Business Sentiment Index rose significantly to 74 in the second quarter compared to a 64 reading in the first quarter. A reading above 50 indicates an overall positive outlook. Sentiment among South-East Asian businesses was mostly upbeat as Thailand recovered and with the exception of Malaysia, which slipped to 67 from 75 as rising costs and uncertain world economics continued to worry businesses in the region. (Reuters)
Thai Central Bank Holds Rates, Cuts 2014 Growth Forecast. Thailand's central bank left its key interest rate unchanged on Wednesday, as expected, and cut its economic growth forecast for 2014 nearly by half to 1.5 %. After its first policy meeting since a military coup in Bangkok on May 22, the Bank of Thailand said it saw the economy shrinking 0.5 % in the first half of this year but growing 3.4-3.5 % in the second half. For 2015, it expected growth of more than 5 %. Southeast Asia's second-largest economy has been battered by political unrest since late 2013. In the first quarter this year, the economy contracted 2.1 % from the previous three months. (Reuters)
Japan Narrows Trade Deficit In May. Japan has narrowed its trade deficit in May as exports fell by more than forecast, and imports also registered a decline. A slowdown in external demand led to a fall in Japan's May exports by 2.7% from a year ago. This marks the first yearly decline since February 2013. Meanwhile imports fell for the first time in 19 months, by 3.6% from 2013. The latest set of trade figures has helped to narrow Japan's trade deficit by 8.3%. For May, the trade balance puts Japan at a deficit of 909bn Japanese yen ($8.9bn). (BBC)
BoJ To Provide Up To US$48bil To Banks To Boost Lending. The Bank of Japan said on Wednesday that it will dole out 4.9 trillion yen (US$48.02bil) this week to banks under a scheme it uses to encourage lending by providing financial institutions with cheap funds. That is more than the 3.5 trillion yen the BoJ last provided in March in a sign that more banks are turning to the scheme, which could help the economy pull further away from 15 years of mild deflation. Under the scheme, the BoJ lends funds to banks at 0.1% interest for four years to encourage banks to increase their overall lending to their customers. (Reuters)
China New Home Prices Down In May. China’s average home prices fell for the first time in two years in May and price weakness spread to more major cities, adding to signs of cooling in the property market which are posing a growing risk to the broader economy. The 0.2% monthly price drop in May, though slight, follows data last week that showed growth in property investment slowed while property sales and new construction tumbled, compounding the challenges for leaders in Beijing as they deal with an economic growth slowdown. The real estate sector, which accounts for more than 15% of China’s economic output and directly impacts around 40 other business sectors, could determine the severity of that downturn. (Reuters)
USA
Fed Says Economy Rebounding As It Trims Bond Purchases. The Federal Reserve said growth is bouncing back and the job market is improving as it continued to reduce the monthly pace of asset purchases. “Economic activity is rebounding in the current quarter and will continue to expand at a moderate pace,” Fed Chair Janet Yellen said at a press conference in Washington today. Even with declines in unemployment, “a broader assessment of indicators suggests that underutilization in the labor market remains significant.” The Federal Open Market Committee trimmed bond-buying by $10 billion for a fifth straight meeting, to $35 billion, keeping it on pace to end the program late this year. (Bloomberg)
US Central Bank Cuts Growth Forecast For 2014. The US Federal Reserve has cut its growth forecast for 2014 because of the harsh winter weather. The central bank is now predicting growth of between 2.1% and 2.3% for this year, down from its March forecast of 2.8% to 3%. However in its accompanying statement, the bank said that economic activity had "rebounded in recent months". (BBC)
US Current Account Deficit Widens Sharply In First Quarter. The U.S. current account deficit increased to its widest point in 1-1/2 years in the first quarter as exports slumped and the surplus on primary income declined, the Commerce Department said on Wednesday. The current account gap, which measures the flow of goods, services, and investments into and out of the country, widened to $111.2 billion from a revised $87.3 billion deficit in the fourth quarter. That was the largest shortfall since the third quarter of 2012. (Reuters)
Europe
Cyprus Sells Bonds, Bailed-0ut Nations’ Market Exile. Cyprus became the euro area’s final bailed-out nation to return to international markets amid a surge in demand for the region’s higher-yielding debt. The Mediterranean country raised 750 million euros ($1.02 billion) in a sale of five-year notes, according to a statement from the Nicosia-based finance ministry. It received orders of about 2 billion euros, the ministry said in the statement. (Bloomberg)
Currencies
Dollar Falls; No ‘Mechanical Formula’ For Rate Hikes. The dollar fell Wednesday after Federal Reserve Chairwoman Janet Yellen refused to give investors clarity on when the central bank could begin to raise rates, saying there is no “mechanical formula.” The dollar fell to ¥101.92 from ¥102.15 late Tuesday. The ICE dollar index, which pits the greenback against six other currencies, fell to 80.380 from 80.607 late Tuesday. The euro rose to $1.3594 from $1.3546. The pound moved up to $1.6991 from $1.6962 late Tuesday. (Market Watch)
Commodities
Brent Rises Above $114 On Iraq Worries, U.S. Crude Dips. Brent crude rose to a nine-month high on Wednesday as investors worried about exports from Iraq, while U.S. crude dipped after government numbers showed domestic crude inventories fell much less than an industry group had reported. Brent rose 81 cents to settle at $114.26 a barrel, the highest level since Sept. 6. U.S. crude fell 39 cents to settle at $105.97 a barrel, the lowest since June 11. (Reuters)
Gold Edges Up After Fed Statement. Gold edged up on Wednesday after the Federal Reserve hinted at a slightly faster pace of interest rate increases next year but slashed its forecast for U.S. economic growth this year, lifting bullion's safehaven appeal. Spot gold was up 0.2 % at $1,273.40 an ounce by 2:34 p.m. EDT (1834 GMT), after trading in a narrow $9 trading range. Among other precious metals, silver rose 0.6% to $19.80 an ounce. Platinum rose 1 % to $1,446.90, and palladium gained 1 % to $821.75 an ounce. (Reuters)
Oil-Gold Tie Breaks 1st Time In 5 Years As Economy Grows. A five-year-long link between crude oil and gold has come apart as the economic recovery boosts energy consumption and lowers the metal’s appeal as a haven, encouraging investors to buy oil and sell gold. The 120-day correlation between West Texas Intermediate crude and gold futures slipped into negative territory this year for the first time since July 2009, according to data compiled by Bloomberg. The relationship tightened, though remained negative, last week as military tension in Iraq boosted prices for both commodities. (Bloomberg)
Asia Business Sentiment Up, Except In M'sia, Japan, Korea. Asia's top companies reported a bullish outlook in the second quarter of 2014 compared to the first three months despite worries over the global economy and rising costs, the latest ThomsonReuters/INSEAD Asia Business Sentiment Survey showed. Of the 124 companies who responded to the poll, none reported a negative outlook for the first time in the survey's history. The ThomsonReuters/INSEAD Asia Business Sentiment Index rose significantly to 74 in the second quarter compared to a 64 reading in the first quarter. A reading above 50 indicates an overall positive outlook. Sentiment among South-East Asian businesses was mostly upbeat as Thailand recovered and with the exception of Malaysia, which slipped to 67 from 75 as rising costs and uncertain world economics continued to worry businesses in the region. (Reuters)
Thai Central Bank Holds Rates, Cuts 2014 Growth Forecast. Thailand's central bank left its key interest rate unchanged on Wednesday, as expected, and cut its economic growth forecast for 2014 nearly by half to 1.5 %. After its first policy meeting since a military coup in Bangkok on May 22, the Bank of Thailand said it saw the economy shrinking 0.5 % in the first half of this year but growing 3.4-3.5 % in the second half. For 2015, it expected growth of more than 5 %. Southeast Asia's second-largest economy has been battered by political unrest since late 2013. In the first quarter this year, the economy contracted 2.1 % from the previous three months. (Reuters)
Japan Narrows Trade Deficit In May. Japan has narrowed its trade deficit in May as exports fell by more than forecast, and imports also registered a decline. A slowdown in external demand led to a fall in Japan's May exports by 2.7% from a year ago. This marks the first yearly decline since February 2013. Meanwhile imports fell for the first time in 19 months, by 3.6% from 2013. The latest set of trade figures has helped to narrow Japan's trade deficit by 8.3%. For May, the trade balance puts Japan at a deficit of 909bn Japanese yen ($8.9bn). (BBC)
BoJ To Provide Up To US$48bil To Banks To Boost Lending. The Bank of Japan said on Wednesday that it will dole out 4.9 trillion yen (US$48.02bil) this week to banks under a scheme it uses to encourage lending by providing financial institutions with cheap funds. That is more than the 3.5 trillion yen the BoJ last provided in March in a sign that more banks are turning to the scheme, which could help the economy pull further away from 15 years of mild deflation. Under the scheme, the BoJ lends funds to banks at 0.1% interest for four years to encourage banks to increase their overall lending to their customers. (Reuters)
China New Home Prices Down In May. China’s average home prices fell for the first time in two years in May and price weakness spread to more major cities, adding to signs of cooling in the property market which are posing a growing risk to the broader economy. The 0.2% monthly price drop in May, though slight, follows data last week that showed growth in property investment slowed while property sales and new construction tumbled, compounding the challenges for leaders in Beijing as they deal with an economic growth slowdown. The real estate sector, which accounts for more than 15% of China’s economic output and directly impacts around 40 other business sectors, could determine the severity of that downturn. (Reuters)
USA
Fed Says Economy Rebounding As It Trims Bond Purchases. The Federal Reserve said growth is bouncing back and the job market is improving as it continued to reduce the monthly pace of asset purchases. “Economic activity is rebounding in the current quarter and will continue to expand at a moderate pace,” Fed Chair Janet Yellen said at a press conference in Washington today. Even with declines in unemployment, “a broader assessment of indicators suggests that underutilization in the labor market remains significant.” The Federal Open Market Committee trimmed bond-buying by $10 billion for a fifth straight meeting, to $35 billion, keeping it on pace to end the program late this year. (Bloomberg)
US Central Bank Cuts Growth Forecast For 2014. The US Federal Reserve has cut its growth forecast for 2014 because of the harsh winter weather. The central bank is now predicting growth of between 2.1% and 2.3% for this year, down from its March forecast of 2.8% to 3%. However in its accompanying statement, the bank said that economic activity had "rebounded in recent months". (BBC)
US Current Account Deficit Widens Sharply In First Quarter. The U.S. current account deficit increased to its widest point in 1-1/2 years in the first quarter as exports slumped and the surplus on primary income declined, the Commerce Department said on Wednesday. The current account gap, which measures the flow of goods, services, and investments into and out of the country, widened to $111.2 billion from a revised $87.3 billion deficit in the fourth quarter. That was the largest shortfall since the third quarter of 2012. (Reuters)
Europe
Cyprus Sells Bonds, Bailed-0ut Nations’ Market Exile. Cyprus became the euro area’s final bailed-out nation to return to international markets amid a surge in demand for the region’s higher-yielding debt. The Mediterranean country raised 750 million euros ($1.02 billion) in a sale of five-year notes, according to a statement from the Nicosia-based finance ministry. It received orders of about 2 billion euros, the ministry said in the statement. (Bloomberg)
Currencies
Dollar Falls; No ‘Mechanical Formula’ For Rate Hikes. The dollar fell Wednesday after Federal Reserve Chairwoman Janet Yellen refused to give investors clarity on when the central bank could begin to raise rates, saying there is no “mechanical formula.” The dollar fell to ¥101.92 from ¥102.15 late Tuesday. The ICE dollar index, which pits the greenback against six other currencies, fell to 80.380 from 80.607 late Tuesday. The euro rose to $1.3594 from $1.3546. The pound moved up to $1.6991 from $1.6962 late Tuesday. (Market Watch)
Commodities
Brent Rises Above $114 On Iraq Worries, U.S. Crude Dips. Brent crude rose to a nine-month high on Wednesday as investors worried about exports from Iraq, while U.S. crude dipped after government numbers showed domestic crude inventories fell much less than an industry group had reported. Brent rose 81 cents to settle at $114.26 a barrel, the highest level since Sept. 6. U.S. crude fell 39 cents to settle at $105.97 a barrel, the lowest since June 11. (Reuters)
Gold Edges Up After Fed Statement. Gold edged up on Wednesday after the Federal Reserve hinted at a slightly faster pace of interest rate increases next year but slashed its forecast for U.S. economic growth this year, lifting bullion's safehaven appeal. Spot gold was up 0.2 % at $1,273.40 an ounce by 2:34 p.m. EDT (1834 GMT), after trading in a narrow $9 trading range. Among other precious metals, silver rose 0.6% to $19.80 an ounce. Platinum rose 1 % to $1,446.90, and palladium gained 1 % to $821.75 an ounce. (Reuters)
Oil-Gold Tie Breaks 1st Time In 5 Years As Economy Grows. A five-year-long link between crude oil and gold has come apart as the economic recovery boosts energy consumption and lowers the metal’s appeal as a haven, encouraging investors to buy oil and sell gold. The 120-day correlation between West Texas Intermediate crude and gold futures slipped into negative territory this year for the first time since July 2009, according to data compiled by Bloomberg. The relationship tightened, though remained negative, last week as military tension in Iraq boosted prices for both commodities. (Bloomberg)
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