Malaysia: Production unexpectedly fell after Japan disasters
Malaysia’s industrial production unexpectedly fell in April as manufacturers and mining companies decreased output and Japan’s record earthquake disrupted trade in the Asian region. Production at factories, utilities and mines fell 2.2% from a year earlier after gaining a revised 2.9%. Slowing output may hurt Malaysia’s economic expansion this year as the 11 March earthquake and tsunami in Japan clouds the outlook for exporters from the Philippines to Thailand. The Southeast Asian nation’s overseas sales of electrical and electronic goods dropped even as commodity shipments rose in April, a report showed last week (Bloomberg)
Indonesia: Holds interest rate a fourth month as rupiah gains
Indonesia’s central bank kept its benchmark interest rate unchanged for a fourth straight month as a strengthening currency helped contain inflation in Southeast Asia’s largest economy. Bank Indonesia maintained the reference rate at 6.75%. President Susilo Bambang Yudhoyono’s policy makers have extended fuel subsidies and let the rupiah gain the most after Taiwan in Asia this year to damp price gains, as rising food and oil costs force China, Thailand, India, Vietnam, Malaysia and the Philippines to raise rates. Indonesia’s inflation eased for a fourth month in May, to below 6%. (Bloomberg)
OPEC: ‘Worst meeting’ ends without agreement, boosting prices
OPEC failed to agree on crude production for the first time in at least 20 years, with six members opposing a Saudi Arabian push to increase output, sending oil prices above USD101 a barrel. “It was one of the worst meetings we’ve ever had,” Saudi Oil Minister Ali al-Naimi said after representatives of the 12-member Organization of Petroleum Exporting Countries adjourned five hours of talks in Vienna. “We were unable to reach an agreement.” Crude in New York jumped 2.7% in the 20 minutes after the meeting ended. The split underscores growing divisions within the group that accounts for about 40% of the world’s crude. Saudi Arabia, OPEC’s largest producer, together with Kuwait, Qatar and the United Arab Emirates, proposed increasing group output by 1.5m barrels a day to 30.3m barrels. They were blocked by members including Iran and Venezuela, which warned of a “collapse” in prices. (Bloomberg)
EU: Trichet may signal July increase after keeping key rate at 1.25%
European Central Bank President Jean- Claude Trichet may signal the bank intends to raise interest rates in July after leaving the benchmark unchanged today. ECB officials kept the key interest rate at 1.25%, as predicted by all 52 economists in a Bloomberg News survey. Trichet is likely to call for “strong vigilance” on inflation, indicating a rate increase next month, a separate survey shows. ECB policy makers are concerned about oil-driven inflation feeding into wage demands. Their task of normalizing policy is being complicated by tensions with the German government over how much pain private-sector creditors should bear in tackling the Greek-led sovereign debt crisis. (Bloomberg)
EU: ECB won’t participate in Greek bond rollover, Trichet says
European Central Bank President Jean- Claude Trichet said the central bank won’t roll over its holdings of Greek government bonds even if private investors agree to such a move to avoid the euro region’s first default. “It is certainly not our intention,” Trichet said. European Union leaders are pushing for private investors to share the burden of financing a second rescue package for Greece, which remains shut out of financial markets a year after its EUR110bn (USD159bn) bailout. Convincing investors to voluntarily roll over their Greek bonds to prevent the country from having to pay maturing bonds has been gaining support among euro-region officials. (Bloomberg)
EU: Greece said to need EUR45bn in new EU, IMF loans
European governments and the International Monetary Fund would lend as much as an extra EUR45bn (USD65bn) to Greece under an expanded plan to avoid the euro area’s first sovereign default, two people with direct knowledge of the talks said. European estimates put Greece’s 2012-14 financing gap at as much as EUR170bn, the people said. It would be filled by the loans, plus around EUR57bn in unspent aid from last year’s bailout, roughly EUR 30bn in asset-sale proceeds and about EUR 30bn in rollovers by creditors. Structuring the rollovers remains the most sensitive part of the package, with European Central Bank President Jean-Claude Trichet warning on a teleconference of euro-area officials yesterday that German calls for a debt exchange might lead rating companies to declare Greece in default, the people said. (Bloomberg)
US: Trade gap narrows as exports rise to record
Record exports and lower oil purchases unexpectedly helped narrow the US trade deficit, easing concern that the world’s largest economy is faltering. The gap shrank 6.7% to $43.7bn in April, the lowest since December, Commerce Department figures showed today in Washington. Other reports showed applications for jobless benefits rose last week and consumer confidence improved. Stocks rallied on expectations trade will help boost economic growth in the second quarter. A 10% drop in the dollar over the past 12 months will probably keep lifting overseas sales at manufacturers like Dow Chemical Co., helping the economy counter slowing consumer spending and auto sales. (Bloomberg)
IMF: Sees 4.4% global growth even as economies hit ‘soft patch
International Monetary Fund acting head John Lipsky said his organization is standing by a 4.4% forecast for global growth this year even as developed economies hit a “soft patch.” Supply-chain disruptions from Japan’s earthquake are clearing “quite rapidly” and a moderation in energy prices may continue, Lipsky told reporters in Beijing today. Rising unemployment and falling home prices in the US, a debt crisis in European nations including Greece, Japan’s March 11 disaster and signs of a slowdown in China have fueled concern that the world expansion will falter. Asian stocks fell today, dragging the regional benchmark index to its lowest level in two weeks, after the Federal Reserve said the US economy is cooling in some regions. The factors that could lead the IMF to revise its forecast seem “temporary and likely to dissipate,” Lipsky said. (Bloomberg)
U.S: Initial jobless claims unexpectedly increased last week, a sign that the labor market is struggling to gain traction. Jobless claims increased by 1,000 to 427,000 in the week ended June 4. The number of people on unemployment benefit rolls and those receiving extended payments decreased. (Source: Bloomberg)
U.S: Household worth increases by USD 943b, Fed says as rising share prices outstripped declines in home values. Net worth for households and non-profit groups increased at a 6.8% annual pace to USD 58.1tr after rising at a 19% pace in the previous three months. American households also cut debt for a 12th consecutive quarter. (Source: Bloomberg)
Vietnam: Should curb 'intolerable' inflation, World Bank says. Vietnam's government should maintain a tight monetary and fiscal policy, including higher interest rates and tougher credit, until the currently "intolerable" inflation rate is less than 10%, the World Bank said. Officials will target reducing inflation to less than 10% by 2012, Deputy Prime Minister Nguyen Sinh Hung said at a meeting in the central Vietnamese town of Ha Tinh. Vietnamese inflation reached 19.78% YoY in May, the highest since December 2008. The government said on June 3 it's targeting 15% inflation this year, up from a previous projection of 11.75%. (Source: Bloomberg)
Australia: Employers added fewer workers than forecast in May as full-time jobs declined for a second month. The number of people employed rose by 7,800. The jobless rate held at 4.9%. (Source: Bloomberg)
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