Latest news with #Tankan
Yomiuri Shimbun
02-07-2025
- Automotive
- Yomiuri Shimbun
Bank of Japan Tankan Survey Gives Off Mixed Signals in June; Sentiment Declines Among Automakers as Trump Tariffs Felt
The Bank of Japan's quarterly Tankan survey gave off mixed signals in June as large manufacturers saw their diffusion index improve slightly for the first time in two quarters. However, this positive trend was heavily overshadowed by dampened sentiment among automakers, who are being directly hit by U.S. tariffs. The additional tariffs imposed by U.S. President Donald Trump's administration on automobiles have already worsened sentiment across large enterprises as well as small and medium-sized ones, sparking concerns about a wider economic impact. Future uncertainties In Hiroshima Prefecture, home to Mazda Motor Corp.'s headquarters and many automotive-related businesses, engine parts manufacturer Benda-Kogyo Co. predicts a decline in its performance for the second half of fiscal 2025. Located in Kure in the prefecture, the company also anticipates a decrease in revenue and profit for the full year. Given that exports to the United States account for about 10% of its sales, the company projects a decline in sales if its client automakers increase prices in the United States in response to the Trump administration's high tariff policies. Benda-Kogyo President Kazunari Yashiro, 56, is closely monitoring the progress of the Japan-U.S. tariff negotiations. 'Negotiations with the United States, which is trying to revitalize its manufacturing industry, will be difficult,' Yashiro said. 'I'm worried that the situation will be prolonged.' Pressure on profits On April 3, the Trump administration imposed an additional 25% tariff on imported automobiles. Three months later, the impact is beginning to be felt. At Honda Motor Co.'s general shareholders meeting in June, President Toshihiro Mibe announced the carmaker's plan to increase production in the United States. 'We will stop exporting finished vehicles from Japan to the United States to minimize the impact [of the tariff burden],' Mibe said. Hasegawa Yuki, a manufacturer of resin parts based in Ota, Gunma Prefecture, that supplies Subaru Corp. and Honda, has seen a decline in orders from Honda. 'If production in Japan drops, our workload will decrease as well,' said the president of the company. According to the Bank of Japan, the export price index on a contract currency basis for May revealed an about 20% year-on-year decline in passenger car exports to North America. This is believed to be due to Japanese automakers lowering prices at the export stage to avoid tariff-driven price increases in the United States. 'If pressure to cut costs is put on small and medium-sized enterprises, it could depress their performance and capital investment,' said Hideo Kumano, chief economist at Dai-ichi Life Research Institute Inc. Toyota Motor Corp. estimates that U.S. tariffs will cut its operating profit by ¥180 billion in April and May alone. If the automotive industry, with its extensive supply chain, were to significantly deteriorate, it could impact the entire domestic economy. Spending by tourists The Tankan survey revealed that sentiment remained high among large and small and medium-sized enterprises in the nonmanufacturing sector. The Japan Foodservice Association reported a 10.8% year-on-year increase in restaurant sales for May. This was due to robust spending by foreign visitors to Japan, coupled with many local consumers choosing to dine at nearby restaurants because the Golden Week holidays in May were interspersed with workdays.
Yomiuri Shimbun
02-07-2025
- Business
- Yomiuri Shimbun
BOJ's June Tankan Survey: Adverse Effects of U.S. High Tariffs May Appear from Now on
Although it was confirmed that the economy remains robust, there is a possibility that the adverse effects of the tariff policy by U.S. President Donald Trump will appear in earnest in the future. It is important for Japanese firms to ascertain the development of the tariff policy and map out business strategies. The Bank of Japan has released the results of its Tankan quarterly economic survey for June. The diffusion index indicates corporate business confidence. The index for large manufacturing companies — a leading indicator — was 13, up 1 percentage point from the previous quarter, marking improvement for the first time in two quarters. This is the first Tankan survey since the U.S. government imposed 'reciprocal tariffs' and additional tariffs on automobiles in early April. Therefore, many in the financial markets had expected a second consecutive quarter of deterioration. Behind the unexpected improvement may be the fact that exporting companies are holding off on raising prices by not passing along the additional high tariffs in their sales prices and lowering export prices to keep sales from declining. By squeezing earnings to a certain extent and preventing a sharp fall in sales, a deterioration in business confidence may have been avoided. By industry, the iron and steel index rose by 15 points to minus 3, and the pulp and paper index improved by 11 points to 29, as material-related industries are passing along the higher costs in their sales prices. It can be said that the gradual recovery trend was reaffirmed as a whole. However, there is no cause for optimism. The reason is because among export-related firms, there are some sectors in which business confidence has deteriorated markedly. The motor vehicles index declined by 5 points to 8, and the outlook also fell. Small and midsize firms in the automobile industry are even more concerned. The outlook among small enterprises fell by 8 points to minus 8. The tariff negotiations between Japan and the United States have run into difficulties, and the July 9 deadline for the suspension of the additional portion of reciprocal tariffs is approaching. Trump complained recently, too, that the automobile trade is 'not fair' for the United States and indicated that he would not compromise on the 25% additional tariffs. The automobile industry, including related companies, is the backbone of the Japanese economy, as it supports about 5.5 million jobs. It also leads wage increases in the annual shunto spring wage negotiations. The Japanese government should persistently continue talks to revise the tariffs on automobiles. However, a view has become more prevalent that it is becoming increasingly difficult to eliminate the high tariff policy at an early stage. Will companies raise selling prices by passing along the high tariffs in their sales prices, or increase local production in the United States? They will be tested as to whether they can work out strategies, including the rebuilding of procurement networks. On the other hand, business confidence among large nonmanufacturing companies, which mainly rely on domestic demand, such as service businesses, fell by 1 point to 34. The retailing index was 18, down 3 points, as households have become thriftier due to high prices. If wage increases continue not to keep pace with high prices, the realization of a virtuous economic cycle will become more distant. The hope is that the government will spend time discussing measures to deal with high prices. (From The Yomiuri Shimbun, July 2, 2025)
01-07-2025
- Business
Global shares mostly lower a day after US markets continued improbable rally
MANILA, Philippines -- Global shares are mostly lower Tuesday a day after U.S. stocks continued a stunning recovery from a springtime sell-off of roughly 20%. Britain's FTSE 100 gained 0.72% to 8,798.91, while Germany's DAX shed 0.4% to 23,809.62. In Paris, the CAC 40 dropped 0.5% to 7,629.65. After another big day for U.S. markets, futures for the S&P shed 0.2% and that for the Dow Jones Industrial Average edged 0.1% lower. In Asian trading, Japan's Nikkei 225 fell 1.2% to 39,986.33 despite positive results of the central bank's quarterly Tankan survey which showed a better than expected improvement in business sentiment among large manufacturers. The Shanghai Composite index added 0.4% to 3,457.75 after China's official manufacturing purchasing managers index, or PMI, rose to a three-month high of 49.7 in June while the PMI for services and other non-manufacturing businesses also rose to a three-month high of 50.5. Hong Kong's stock market was closed on Tuesday. South Korea's KOSPI Composite Index rose 0.6% to 3,089.65. The government reported that exports bounced back in June, helped by strong demand for semiconductors, ships and health products. 'Automobile and automotive parts exports also gained. Strong electric vehicle exports to the EU and solid used-car exports partially offset the decline of U.S. exports. However, we expect auto exports to remain soft due to tariffs and increased production in the U.S.,' Min Joo Kang of ING Economics said in a report. Australia's S&P/ASX 200 edged down 0.1% to 8,541.10. Thailand's SET jumped 1.7% after Thailand's Constitutional Court has suspended Prime Minister Paetongtarn Shinawatra from office pending an investigation over a leaked phone call with a senior Cambodian leader. The PSEi in Manila, Philippines, added 0.9% to 6,423.85 On Monday, Wall Street resumed its upward climb. The S&P 500 rose 0.5%. It has staged a stunning recovery from its springtime sell-off of roughly 20%. The Dow added 0.6% and the Nasdaq composite gained 0.5%. Stocks got a boost after Canada said it would rescind a planned tax on U.S. technology firms and trade talks with the United States resumed. On Friday, U.S. President Donald Trump had said he was suspending those talks to retaliate for the tax, calling it 'a direct and blatant attack on our country.' U.S. stocks have bounced back on hopes that Trump will reach deals with other countries to lower his painful high tariffs and avert trade wars that could stifle the economy and send inflation higher. Many of Trump's announced tariffs have been postponed and are due to kick back into effect on July 9. The U.S. stock market recovery could raise the risk Trump will resume escalating tariffs, similar to what happened in 2018-2019, according to strategists at Deutsche Bank led by Parag Thatte and Binky Chadha. On Wall Street, Oracle's 4% rise was one of the strongest forces lifting the S&P 500. CEO Safra Catz said the tech giant 'is off to a strong start' in its fiscal year and that it signed multiple large cloud services agreements, including one that could contribute over $30 billion in annual revenue two fiscal years from now. GMS' stock jumped 11.7% after the supplier of specialty building products said it agreed to sell itself to a Home Depot subsidiary in a deal that would pay $110.00 per share in cash. That would give it a total value of roughly $5.5 billion, including debt. In other dealings early Tuesday, benchmark U.S. crude oil lost 4 cents to $65.07 per barrel, while Brent crude, the international standard, fell 7 cents to $66.80 per barrel. The U.S. dollar dipped to 142.86 Japanese yen from 144.04 yen. The euro rose to $1.1822 from $1.1787.
Mint
01-07-2025
- Automotive
- Mint
Japan's 10-Year Bond Auction Gives Support Ahead of 30-Year Sale
Demand at Japan's sale of 10-year government notes was relatively strong in a boost to sentiment going into a key auction of 30-year bonds later this week. The bid-to-cover ratio was at 3.51, higher than the 12-month average of 3.14, as expectations for rate hikes by the central bank receded and upward pressure on longer-maturity yields eased. Ten-year bonds rallied. Japan's sovereign debt auctions have been in the spotlight since late May after a poorly received auction of 20-year bonds sent super-long yields to record highs. That spike in yields flowed through into global debt markets, where investors have been on guard over expanding government deficits, and prompted Japan's Ministry of Finance to tweak its issuance plans from this month. 'Market sentiment seems to be good for JGBs entering a new quarter, especially after the meeting between the MOF and primary dealers late last month resulted in a reduction of super-long bond issuance amounts,' said Anmol Agrawal, a strategist at Intouch Capital Markets Pte. 'The litmus test for markets will now be the upcoming 30-year bond auction on Thursday.' The 10-year JGB yield fell 4 basis points to 1.39% to the lowest since June 13th after the auction results. Bond futures rose 20 ticks to 139.22. Ten-year notes serve as a benchmark for Japan's long-term lending rates, and play a key role in influencing mortgage rates and corporate borrowing costs. The bond auction was 'very strong,' said Miki Den, a senior rates strategist at SMBC Nikko Securities Inc. Many investors may have judged that the Bank of Japan cannot raise interest rates until there's a recovery in sentiment in the automobile sector, which dropped significantly in the Tankan survey, he said. The sale comes after results from a confidence survey among Japan's largest manufacturers edged up in June. That said, there are lingering concerns as the auto sector remains under pressure as Japan continues to seek a comprehensive agreement that includes sector-specific tariffs which includes carmakers. But still, the lack of a meaningful decline in 30- and 40-year yields suggests that caution surrounding super-long bonds remains, as the market still has to navigate a 30-year bond sale on Thursday. What Bloomberg Strategists Say... JGB futures are firmer after Tuesday's 10-year auction produced solid metrics, but the good mood will struggle to sustain after the strong Tankan report that came earlier. The data opened the door for BOJ Governor Ueda to lean hawkish when he speaks later today at Sintra in Portugal. With a tricky 30-year debt sale still to come on Thursday, JGB traders are likely to curb their enthusiasm. — Mark Cranfield, MLIV Strategist. Read more on MLIV The bid-to-cover ratio at Tuesday's sale was slightly lower than 3.66 at last month's auction of that tenor. The tail, or gap between average and lowest-accepted prices, came in at 0.03, compared with 0.01 previously. In order to stabilize demand for Japanese government bonds, the finance ministry announced changes to its bond issuance plan in June. The 10-year issuance amount was left unchanged, underscoring steady investor appetite for the sector. The ministry will reduce issuance of 20-, 30- and 40-year bonds from this month. Separately, the Bank of Japan said last month it would slow down its withdrawal from the market from next year in a move aimed at ensuring stability. With assistance from Masahiro Hidaka, Umesh Desai and Hidenori Yamanaka. This article was generated from an automated news agency feed without modifications to text.
Mint
01-07-2025
- Automotive
- Mint
Japan's 10-year bond auction eases market jitters ahead of key 30-year sale
Ahead of the 30-year bond auction later this week, investor sentiment received a lift following a relatively steady sale of Japan's sale of 10-year government notes. According to a Bloomberg report, the bid-to-cover ratio was at 3.51, higher than the 12-month average of 3.14, as expectations for rate hikes by the central bank receded and upward pressure on longer-maturity yields eased. As a result, the ten-year bonds rallied. Japan's sovereign debt auctions have drawn heightened attention since late May, following a weak 20-year bond auction that pushed super-long yields to record highs. The surge in yields rippled through global debt markets, where investors are increasingly wary of growing government deficits. In response, Japan's Ministry of Finance has adjusted its bond issuance plans starting this month. 'Market sentiment seems to be good for JGBs entering a new quarter, especially after the meeting between the MOF and primary dealers late last month resulted in a reduction of super-long bond issuance amounts,' Anmol Agrawal, a strategist at Intouch Capital Markets Pte, told Bloomberg. 'The litmus test for markets will now be the upcoming 30-year bond auction on Thursday.' The 10-year Japanese government bond (JGB) yield dropped 4 basis points to 1.39% following the auction results, while bond futures climbed 23 ticks to 139.25. As a benchmark for Japan's long-term lending rates, the 10-year note plays a crucial role in shaping mortgage rates and corporate borrowing costs across the economy. The bond auction was 'very strong,' said Miki Den, a senior rates strategist at SMBC Nikko Securities Inc told Bloomberg. Many investors may have judged that the Bank of Japan cannot raise interest rates until there's a recovery in sentiment in the automobile sector, which dropped significantly in the Tankan survey, he said. The sale comes after results from a confidence survey among Japan's largest manufacturers edged up in June. However, the lack of a meaningful decline in 30- and 40-year yields suggests that caution surrounding super-long bonds remains, as the market still has to navigate a 30-year bond sale on Thursday. JGB futures are firmer after Tuesday's 10-year auction produced solid metrics, but the good mood will struggle to sustain after the strong Tankan report that came earlier. The data opened the door for BOJ Governor Ueda to lean hawkish when he speaks later today at Sintra in Portugal. With a tricky 30-year debt sale still to come on Thursday, JGB traders are likely to curb their enthusiasm. — Mark Cranfield, MLIV Strategist The bid-to-cover ratio at Tuesday's auction came in slightly below the 3.66 recorded at last month's sale of the same tenor. The tail—the difference between the average and lowest-accepted prices—widened to 0.03 from 0.01 previously, indicating a modest dip in bidding strength. To help stabilise demand for Japanese government bonds, the Ministry of Finance announced adjustments to its issuance plans in June. While the amount of 10-year bonds remains unchanged, reflecting consistent investor interest, the ministry will scale back issuance of 20-, 30-, and 40-year bonds starting this month. Separately, the Bank of Japan said last month it would slow the pace of its market withdrawal beginning next year, aiming to maintain financial stability.
