US: S&P 500, Nasdaq retreat from record rally after hot producer inflation data
The Dow Jones Industrial Average fell 31.4 points, or 0.07 per cent, at the open to 44,890.84.
The S&P 500 fell 13.1 points, or 0.20 per cent, at the open to 6,453.46, while the Nasdaq Composite dropped 63.9 points, or 0.29 per cent, to 21,649.211 at the opening bell. REUTERS
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Business Times
32 minutes ago
- Business Times
Domestic demand drives Malaysia's Q2 GDP up 4.4% amid export slump
[KUALA LUMPUR] Malaysia's domestic demand shielded the economy from a sharper slowdown in the second quarter, and helped deliver a 4.4 per cent year-on-year growth – despite tumbling net exports and the current account surplus being at its smallest in over 20 years. The April-to-June performance announced by Bank Negara Malaysia on Friday (Aug 15) fell just shy of the 4.5 per cent growth forecast by economists in a recent Reuters poll, as well as the advance estimates from the Department of Statistics Malaysia (DOSM). DOSM chief statistician Mohd Uzir Mahidin attributed the economic growth to several key factors, including continued consumer spending, a resilient labour market and sustained trade activity. He noted that the US-China tariff truce had lifted exports in the region's economies, and that moderating inflation at home and abroad had supported purchasing power. Between April and June, Malaysia's private consumption rose 5.3 per cent year on year; public consumption went up by 6.4 per cent, also on the year. Net exports dropped over 70% Lower oil and gas production, the result of planned maintenance activities, was a factor that weighed on Malaysia's economic growth in Q2. PHOTO: BLOOMBERG Despite strong electrical and electronics exports, the overall trade balance weakened. Net exports plunged by 72.6 per cent, dragged down by a decline in mining-related exports and a rise in capital imports. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up Mohd Uzir noted: 'Lower oil and gas production due to planned maintenance activities was a factor that weighed on growth in the second quarter.' He added that slower exports were exacerbated by waning support from front-loading activities; however, the continued demand for electrical and electronics products and robust tourism activities would support export growth going forward, he said. Overall growth was weighed down by the mining sector's decline amid lower commodity production, said Bank Negara governor Abdul Rasheed Ghaffour. Malaysia's current-account surplus for the quarter narrowed to RM300 million (S$91.3 million), the smallest in 26 years. The goods account surplus narrowed sharply to RM17 billion, while the services account deficit edged up to RM3.3 billion. Lingering uncertainties Bank Negara Malaysia governor Abdul Rasheed Ghaffour said the country's overall economic growth was weighed down by the mining sector's decline amid lower commodity production. PHOTO: BANK NEGARA MALAYSIA The governor, expressing cautious optimism about Malaysia's economic outlook, said that the country is on a 'solid footing', ready to face future headwinds, even as front-loading normalises. He acknowledged that persistent external challenges, especially the lingering tariff uncertainties, could take time to play out, but that the country is approaching these challenges from a position of strength. The governor highlighted that the economy is underpinned by resilient domestic demand, ongoing electrical and electronics sector growth, and a diversified export base. 'These fundamentals, together with continued structural reforms, ensure Malaysia is well-positioned to navigate the evolving global landscape,' he explained. Last month, Bank Negara lowered the economic forecast range to between 4 and 4.8 per cent for 2025, down from its estimate in March of 4.5 to 5.5 per cent. The revision of economic forecasts is a nod to the rising uncertainty over US trade tariffs, shifting trade alliances and geopolitical instability – all of which are factors weighing on the outlook for the region's export-reliant economies. Economists' 2025 growth forecast: between 4.1% and 4.4% Bank Negara's monetary policies, coupled with the Malaysian government's RM2 billion in Merdeka cash handouts, are expected to boost domestic spending. PHOTO: AFP Mohd Afzanizam Abdul Rashid, Bank Muamalat's chief economist, projects that Malaysia's economy will grow more slowly in the second half of 2025, and come in at between 3.7 and 3.8 per cent; the full-year growth rate would be around 4.1 per cent. He highlighted that Bank Negara has been proactive with its monetary policy, having cut the statutory reserve requirement and the overnight policy rate earlier this year. 'These measures, along with RM2 billion in Merdeka cash handouts, are expected to boost domestic demand and counteract the looming risks of a global slowdown,' he told The Business Times. ANZ Research economists Arindam Chakraborty and Khoon Goh noted that external demand is expected to weaken, but that overall growth should remain supported by resilience in domestic demand and a sustained momentum in investment. The research firm forecasts Malaysia's GDP to expand at 4.1 per cent in 2025. Regarding monetary policy, the ANZ Research economists do not expect another rate cut unless weaker external demand significantly affects incomes and consumption. RHB Bank senior economist Chin Yee Sian has a slightly more positive outlook on the country's economic growth, forecasting a 4.2 per cent GDP expansion, with potential to reach 4.4 per cent. She notes that the outcome hinges on external factors such as clearer guidance on US tariffs, easing US-China tensions, as well as the impact of the domestic stimulus measures. Chin added that some domestically-focused industries remain resilient to global uncertainties because they are insulated by strong local demand; these sectors are retail, consumer goods, and construction. Ringgit gains In Q2, the Malaysian currency had appreciated by 5.9 per cent against the US dollar as at Aug 13. On a nominal effective exchange rate basis, the ringgit rose by 2.1 per cent. As at 4 pm on Friday, the ringgit was trading at 4.2184 against the greenback, nearly 5.7 per cent higher than the RM4.4715 level at the start of the year. Against the Singapore dollar, it depreciated around 0.5 per cent to 3.2893, from RM3.2742 on Jan 1. Commenting on the currency's movement, Abdul Rasheed said that he expected the ringgit to continue being influenced by external factors, but that its value would be supported by Malaysia's favourable economic outlook, structural reforms, and ongoing efforts to encourage capital inflows. Moderate inflation Lower inflation for fuel and food-related items was partially balanced by a smaller decrease in mobile service prices. BT FILE Between April and June, the headline inflation eased to 1.3 per cent. Its core inflation remained broadly stable, at 1.8 per cent. The governor said that the lower inflation for fuel and food-related items were partly offset by a slower decline in prices for mobile services. Abdul Rasheed expects inflation to remain moderate in 2025, and projects headline inflation to average between 1.5 and 2.3 per cent. The headline inflation forecast range for the year was revised down, following the more moderate demand and cost outlook of the earlier projections in March 2025. 'Inflationary pressure from global commodity prices is expected to remain limited, contributing to moderate domestic cost conditions. In this environment, the impact of domestic policy measures on inflation is expected to remain contained,' he added.
Business Times
2 hours ago
- Business Times
Domestic demand powers Malaysia's Q2 GDP up 4.4% amid export slump
[KUALA LUMPUR] Malaysia's domestic demand shielded the economy from a sharper slowdown in the second quarter, and helped deliver a 4.4 per cent year-on-year growth – despite tumbling net exports and the current account surplus being at its smallest in over 20 years. The April-to-June performance announced by Bank Negara Malaysia on Friday (Aug 15) fell just shy of the 4.5 per cent growth forecast by economists in a recent Reuters poll, as well as the advance estimates from the Department of Statistics Malaysia (DOSM). DOSM chief statistician Mohd Uzir Mahidin attributed the economic growth to several key factors, including continued consumer spending, a resilient labour market and sustained trade activity. He noted that the US-China tariff truce had lifted exports in the region's economies, and that moderating inflation at home and abroad had supported purchasing power. Between April and June, Malaysia's private consumption rose 5.3 per cent year on year; public consumption went up by 6.4 per cent, also on the year. Net exports dropped over 70% Lower oil and gas production, the result of planned maintenance activities, was a factor that weighed on Malaysia's economic growth in the second quarter. PHOTO: BLOOMBERG Despite strong electrical and electronics exports, the overall trade balance weakened. Net exports plunged by 72.6 per cent, dragged down by a decline in mining-related exports and a rise in capital imports. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up Mohd Uzir said: 'Lower oil and gas production due to planned maintenance activities was a factor that weighed on growth in the second quarter.' He added that slower exports were exacerbated by waning support from front-loading activities; however, the continued demand for electrical and electronics products and robust tourism activities would support export growth going forward, he said. Overall growth was weighed down by the mining sector's decline amid lower commodity production, said Bank Negara governor Abdul Rasheed Ghaffour. Malaysia's current-account surplus for the quarter narrowed to RM300 million (S$91.3 million), the smallest in 26 years. The goods account surplus narrowed sharply to RM17 billion, while the services account deficit edged up to RM3.3 billion. Lingering uncertainties Bank Negara Malaysia governor Abdul Rasheed Ghaffour said the country's overall economic growth was weighed down by the mining sector's decline amid lower commodity production. PHOTO: BANK NEGARA MALAYSIA The governor, expressing cautious optimism about Malaysia's economic outlook, said the country is on a 'solid footing', ready to face future headwinds, even as front-loading normalises. He acknowledged that persistent external challenges, especially the lingering tariff uncertainties, could take time to play out, but that Malaysia is approaching these challenges from a position of strength. The governor highlighted that Malaysia's economy is underpinned by resilient domestic demand, ongoing electrical and electronics sector growth, and a diversified export base. 'These fundamentals, together with continued structural reforms, ensure Malaysia is well-positioned to navigate the evolving global landscape,' he said. Last month, Bank Negara lowered the economic forecast range to between 4 and 4.8 per cent for 2025, down from its estimate in March of 4.5 to 5.5 per cent. The revision of economic forecasts is a nod to the rising uncertainty over US trade tariffs, shifting trade alliances and geopolitical instability – all of which are factors weighing on the outlook for the region's export-reliant economies. Economists' 2025 growth forecast: between 4.1% and 4.4% Bank Negara's monetary policies, coupled with the Malaysian government's RM2 billion in Merdeka cash handouts, are expected to boost domestic spending. PHOTO: AFP Bank Muamalat's chief economist, Mohd Afzanizam Abdul Rashid, projects that Malaysia's economy will grow more slowly in the second half of 2025, and come in at between 3.7 and 3.8 per cent; the full-year growth rate would be around 4.1 per cent. He highlighted that Bank Negara has been proactive with its monetary policy, having cut the statutory reserve requirement and the overnight policy rate earlier this year. 'These measures, along with RM2 billion Merdeka in cash handouts, are expected to boost domestic demand and counteract the looming risks of a global slowdown,' he told The Business Times. ANZ Research economists Arindam Chakraborty and Khoon Goh noted that external demand is expected to weaken, but that overall growth should remain supported by resilience in domestic demand and a sustained momentum in investment. The research firm forecasts Malaysia's GDP to expand at 4.1 per cent in 2025. Regarding monetary policy, they do not expect another rate cut unless weaker external demand significantly affects incomes and consumption. RHB Bank senior economist Chin Yee Sian has a slightly more positive outlook on Malaysia's economic growth, forecasting a 4.2 per cent GDP expansion, with potential to reach 4.4 per cent. She notes that the outcome hinges on external factors such as clearer guidance on US tariffs, easing US-China tensions, as well as the impact of the domestic stimulus measures. Chin added that some domestically-focused industries remain resilient to global uncertainties because they are insulated by strong local demand; these sectors are retail, consumer goods, and construction. Ringgit gains In the second quarter, Malaysian currency had appreciated by 5.9 per cent against the US dollar as at Aug 13. On a nominal effective exchange rate basis, the ringgit rose by 2.1 per cent. As at 4 pm on Friday, the ringgit traded at 4.2184 against the greenback, nearly 5.7 per cent higher than the RM4.4715 level at the start of the year. Against the Singapore dollar, it depreciated around 0.5 per cent to 3.2893, from RM3.2742 on Jan 1. Commenting on the currency's movement, Abdul Rasheed said he expected the ringgit to continue being influenced by external factors, but that its value would be supported by Malaysia's favourable economic outlook, structural reforms, and ongoing efforts to encourage capital inflows. Moderate inflation Lower inflation for fuel and food-related items was partially balanced by a smaller decrease in mobile service prices. BT FILE Between April and June, Malaysia's headline inflation eased to 1.3 per cent. Its core inflation remained broadly stable, at 1.8 per cent. The governor said the lower inflation for fuel and food-related items were partly offset by a slower decline in prices for mobile services. Abdul Rasheed expects inflation to remain moderate in 2025, projecting headline inflation to average between 1.5 and 2.3 per cent. The headline inflation forecast range for the year was revised down, following the more moderate demand and cost outlook of the earlier projections in March 2025. 'Inflationary pressure from global commodity prices is expected to remain limited, contributing to moderate domestic cost conditions. In this environment, the impact of domestic policy measures on inflation is expected to remain contained,' he added.
Business Times
2 hours ago
- Business Times
How cryptocurrencies accelerate geopolitical shifts
MONEY is power, and power is money, as everyone knows. So it's worth paying special attention to the technological revolution that is about to disrupt the world's money flows at the very moment global political power is shifting from familiar foundations. Cryptocurrencies won't change the global balance of power alone, but they will speed and distort the changes underway. This revolution is the simple promise that decentralised ledgers, sophisticated algorithms and massive computing power will allow the transfer of money, stocks and other property at the cost of an e-mail and with the security of an armoured truck. These technologies will spread fastest in tyrannies, where they become tools of government control as central bank digital currencies; and in failed states where, as private cryptocurrencies, they offer savings and payment mechanisms that do not otherwise exist. If liberal democracies don't encourage faster innovation, develop more balanced regulations and reinforce the strengths behind their markets, then economic and political power will flow elsewhere. There is a version of the future in which not much changes. The world's largest economies continue to host the largest flows of these new financial assets, setting the rules for transfers, reporting and taxation. Old intermediaries, custodians and payments systems wither away in the extreme vision, and new mechanisms take their place under the watchful eyes of the current regulators. But that does not feel quite right, because the assault on legacy financial infrastructure is also an assault on government control in general and the dollar in particular. The emergence of these technologies fuels shifts in political power that are already under way within and among countries, especially among the world's largest economies. Challenges to liberal democracy In many Western democracies, the emergence of digital assets coincides with a moment of greater political populism. The earliest 'crypto-bros' pushed a deliberate agenda to protect against government and corporate intrusion, and their anger dovetailed nicely with President Donald Trump's case that the 'Deep State' is rigged. Together, they now embrace bitcoin as 'digital gold' as the dollar weakens, even as they block the Federal Reserve from developing a central bank digital currency (CBDC). BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Elsewhere, governments struggle to strike a balance between El Salvador's embrace of bitcoin as legal tender and the Taliban's outright crypto ban. Most regulators have been cobbling together rules that preserve their control of financial stability and tools to track criminals, while hoping they leave enough flexibility for innovation and privacy protection. If cryptocurrencies chip away at the traditional prerogatives of all regulators, however, they pose special challenges to the regulators of the world's dominant currency. Even as the Chinese government cracks down on cryptocurrencies at home, the digital renminbi is key to its agenda abroad to promote an alternative to the dollar. The European Central Bank has similar ambitions for its currency, in hopes that broad adoption of a digital euro will reduce borrowing costs and reinforce the continent's 'monetary sovereignty'. Monetary sovereignty is the polite term for undercutting Washington's extensive use of financial sanctions against criminals and rogue governments. Russia, Iran and Venezuela have all experimented with their own digital currencies to avoid sanctions. The most promising effort, however, is Project mBridge, a prototype to settle payments in CBDCs and avoid dollar settlements altogether. China, Hong Kong, Thailand, the United Arab Emirates and Saudi Arabia are among its principal sponsors after the Bank for International Settlements withdrew. The Trump administration's launch of a strategic bitcoin reserve in March fulfilled an election promise and was justified in part as a hedge against the likely weakening of America's own currency. If others follow America's lead, countries may scramble to control the computational power that validates bitcoin transactions. A plan for the future Just how much all these forces may erode government power or undercut the dollar's reserve status remains unclear. But with dictatorships tempted to use digital currencies to reinforce their authority and weak states forced to surrender to these powerful technologies altogether, liberal democracies must find ways to get the design right of these new currencies. Above all, research programmes and market incentives need to support faster innovation in digital assets that remain in their infancy. At the same time, regulators must develop frameworks that balance reliability and innovation, security and convenience, law enforcement with privacy. But these frameworks must not be allowed to raise doubts about financial stability. Most important, however, will be the reinforcement of the traditional institutions that make the US, Europe, Japan and other advanced democracies such attractive long-term investments. Currencies reflect the business models that stand behind them, whether they are in leather wallets, bank accounts or distributed ledgers. Especially amid the populism that drives much of the enthusiasm around cryptocurrencies, governments need to redouble their commitments to reinforce entrepreneurial ecosystems, advanced research laboratories, independent courts and all the democratic institutions that support innovation and growth, but also reliability and transparency. Without a deliberate agenda to guide and shape the crypto revolution, it's difficult to see a happy next chapter in the world's shifting geopolitical balance. OMFIF The writer is managing partner of Arbroath Group
