Major Economic News The Federal Reserve decided to press on with $85 billion in monthly bond purchases, saying it needs to see more evidence that the economy will continue to improve. “The recovery in the housing sector slowed somewhat in recent months,” the Federal Open Market Committee said yesterday at the end of a two-day meeting in Washington. Ben S. Bernanke is pushing unprecedented accommodation into the final months of his Fed chairmanship as he seeks to shield the four-year economic expansion from the impact of this month’s partial U.S. government shutdown. The cost of living in the U.S. rose as projected in September as fuel charges climbed, capping the smallest year-to-year gain in five months. The consumer price index increased 0.2 percent, matching the median forecast of 86 economists surveyed by Bloomberg, after rising 0.1 percent the prior month. Stripping out volatile food and fuel, the so-called core measure climbed 0.1 percent for a second month, less than projected. The U.S. posted its smallest budget deficit in five years as employment gains and higher taxes propelled revenue to a record, while spending fell by the most since the Eisenhower administration. Outlays exceeded receipts by $680.3 billion in the 12 months ended Sept. 30, the narrowest gap since 2008, compared with a $1.09 trillion shortfall in fiscal 2012. Euro-area financial institutions signaled they may make it easier for companies to get loans for the first time in more than six years, which may help the region’s recovery gather momentum. The European Central Bank said in a quarterly survey that banks expect to relax standards on corporate lending this quarter. That’s the first such response since the fourth quarter of 2009 and, if it occurs, would mark the first easing of conditions since the second quarter of 2007. Lenders also plan to ease access to consumer loans and mortgages, and predicted a rise in loan demand across all categories. Spain’s two-year recession ended in the third quarter, underpinning Prime Minister Mariano Rajoy’s bet that exports can reboot the euro region’s fourth-largest economy. Gross domestic product rose 0.1 percent from the second quarter, when it declined 0.1 percent. That matched the Bank of Spain’s estimate on Oct. 23. Inflation in October was 0.1 percent, the least since 2009. Economic confidence in the euro-area rose more than economists forecast in October, adding to signs the single-currency bloc’s recovery is gaining momentum. An index of executive and consumer sentiment increased for a sixth month to 97.8 from 96.9 in September. That exceeded the median estimate of 97.2 in a Bloomberg News survey of 31 economists. The euro-area economy is in what the European Central Bank says is a “gradual” recovery after exiting a recession in the second quarter. The proposed six per cent rate for the goods and services tax (GST) is a fair value as it will create net incremental effect on the countrys revenue, said Minister in the Prime Ministers Department Datuk Seri Abdul Wahid Omar. From the six per cent GST, we will see net income surplus. This is after taking into account the distribution of financial aids like BR1M, as well as reduction in personal income and corporate taxes, Wahid said. Wahid also said the GST rate is within the range of the current sales and service tax rate, which is at between five and 10 per cent. Equity and Commodity Markets Share prices on Bursa Malaysia ended higher in sync with regional markets after Wall Street soared overnight to new highs. The FBM KLCI finished 1.73 points higher at 1,817.38, after moving between 1,812.66 and 1,818.89 throughout the day. The Finance Index rose 7.77 points to 16,752.55, the Industrial Index slid 4.6 points to 3,146.41 and the Plantation Index rose 61.42 points to 8,610.75. U.S. stocks fell, after the Standard & Poor’s 500 Index rose to a third straight record, as investors assessed economic data and earnings before the Federal Reserve’s decision on whether to cut monetary stimulus. The S&P 500 dropped 0.3 percent to 1,767.57. The Dow Jones Industrial Average slid 26.78 points, or 0.2 percent, to 15,653.57. West Texas Intermediate fell, extending a second monthly loss, as an increase in U.S. crude stockpiles signaled ebbing demand in the world’s biggest oil consumer. WTI for December delivery declined as much as $1.10 to $97.10 a barrel in electronic trading on the New York Mercantile Exchange. Palm climbed to the highest level in eight months on speculation that output in Malaysia, the world’s second-largest producer, will drop starting next month because of growing cycles and the beginning of the monsoon season. The contract for delivery in January advanced 1.8 percent to RM2,543 a metric ton on the Bursa Malaysia Derivatives.
Posted on: Fri, 01 Nov 2013 01:21:47 +0000
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