Gloomy Japan 'Tankan' Survey Drags Down Asian Shares

Asian indexes were largely lower on Friday, mirroring a drop on Wall Street, as Japan's central bank's quarterly report revived concerns about the world's third largest economy.

Photo Insert: The tankan calculates corporate sentiment by subtracting the number of companies reporting poor business circumstances from those reporting favorable business conditions.

According to Yuri Kageyama of the Associated Press (AP), on July 1, 2022, recent data indicate that global growth is stalling as countries deal with recurrent waves of coronavirus epidemics, skyrocketing prices, and the war in Ukraine.

Japanese and South Korean stocks dipped, while Australian stocks increased modestly. Hong Kong was closed for a holiday. The headline index for large manufacturers in the Bank of Japan's "tankan" survey was 9, down from 14 in the previous quarter and the second consecutive quarter of falls.

The tankan calculates corporate sentiment by subtracting the number of companies reporting poor business circumstances from those reporting favorable business conditions. Non-manufacturing indices performed better, although concerns are mounting due to pressures from a weaker Japanese yen. According to Stephen Innes, managing partner at SPI Asset Management, the tankan results may spark criticism of the Bank of Japan's ultra-loose monetary policy, which is one of the reasons for the weaker yen.

“The Bank may wait until the Q3 survey is released before stepping away from its ultra-dovish setting,” he said in a report.

In a glimmer of good news, a study conducted by the Chinese business magazine Caixin indicated that China's factory activity increased at its fastest rate in 13 months in June, following the relaxation of anti-virus measures that had shut down Shanghai and other industrial areas.

Caixin's monthly purchasing managers' index increased to 51.7 from 48.1 in May on a 100-point scale, with readings above 50 indicating increased activity. For the third month in a row, new orders increased but employment fell.

The Nikkei 225, Japan's benchmark index, fell 0.8 percent to 26,175.78. The S&P/ASX 200 index in Australia rose 0.2 percent to 6,580.90. The Kospi in South Korea fell 0.4 percent to 2,322.55. The Shanghai Composite Index increased 0.2 percent to 3,403.85.

On Thursday, Wall Street reported its worst quarter since the pandemic began in early 2020. The first half of the year was the weakest since the first six months of 1970. The S&P 500 slid 0.9 percent to 3,785.38, its fourth consecutive loss.

The benchmark index is currently down 21% from its all-time high at the start of the year. It entered a bear market in early June. The Dow Jones Industrial Average dropped 0.8% to 30,775.43.

The Nasdaq lost 1.3 percent to 11,028.74, while small-company stocks declined as well, with the Russell 2000 falling 0.7 percent to 1,707.99, according to Damian J. Troise and Alex Veiga of the Associated Press (AP).

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