Asian shares mostly lower after pessimistic ‘tankan’ survey

TOKYO

Asian benchmarks were mostly lower on Friday, echoing a decline on Wall Street, after a quarterly report by Japan’s central bank rekindled worries about the world’s third largest economy.

Recent data shows that global growth is slowing, as countries struggle with new coronavirus outbreaks and soaring prices, and the war against Ukraine.

Japan and South Korea saw shares fall, while Australia saw shares rise slightly. Hong Kong was closed to trading for holidays.

In the Bank of Japan “tankan” survey, the headline index for large manufacturers was 9, down from 14 in the previous quarter and the second straight quarter of declines. The tankan measures corporate sentiment by subtracting the number of companies that report negative business conditions from those that respond positively.

The numbers for non manufacturing indicators were better but there are increasing concerns about the Japanese yen’s weakness.

The tankan results could be criticized by the Bank of Japan for its ultra-loose monetary policy. This is one of the reasons why the yen has fallen. saidStephen Innes is the managing partner of SPI Asset Management.

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

However in a bit of positive news, a survey by a Chinese business magazine, Caixin, found China’s factory activity expanded in June at its strongest rate in 13 months following an easing of anti-virus restrictions that shut down Shanghai and other industrial centres..

A monthly purchasing managers’ index issued by Caixin rose to 51.7 from 48.1 in May on a 100-point scale on which numbers above 50 show activity increasing. The number of new orders increased while the number of employed declined for the third consecutive month.

Japan’s benchmark Nikkei 225 dropped 0.8% to 26,175.78. Australia’s S&P/ASX 200 edged up 0.2% to 6,580.90. South Korea’s Kospi fell 0.4% to 2,322.55. The Shanghai Composite rose 0.2%, to 3,403.85.

Hong Kong’s markets were closed on a holiday.

Wall Street closed Thursday’s worst quarter since the outbreak of the pandemic in 2020. It was the worst first-half since the first six month of 1970.

“And in 1970 there was a solid rebound after that first half decline,” saidLindsey Bell is chief markets and money strategist for Ally Invest. “This time around, the impact of the Fed, the impact of inflation and the uncertainty of where growth goes from here is really weighing on investors’ minds. … We just don’t know when the clouds of uncertainty are going to start to clear.”

The S&P 500 fell 0.9%, its fourth consecutive drop, to 3,785.38. The benchmark index has fallen 21% since its all-time high in June. It entered a bearish market in June.

The Dow Jones Industrial Average dropped 0.8% to 30,775.43. The Nasdaq dropped 1.3% to 11,028.74. Small-company stocks also fell. The Russell 2000 lost 0.7% to 1,707.99.

As businesses raise prices on everything, including food and clothing, rising inflation is behind the slump in the wider market. Consumers are being squeezed harder. According to a series economic updates, inflation is still stubbornly high.

To cool inflation, the Federal Reserve and other central banks have aggressively increased interest rates to slow down economic growth. Higher interest rates can lower inflation but can also lead to a recession if the economy slows down too much. They also reduce the prices of stocks and bonds, cryptocurrencies, and other investments.

The yield on a 10-year Treasury, which helps determine mortgage rates, dropped to 3.01% on Wednesday, from 3.09% at the end of Wednesday.

Technology companies were the largest weights on the stock market as investors continued to favor utilities and traditional defensive stocks. Apple declined 1.8%, while Exelon grew 2.2%.

Retailers and other companies that depend on consumer spending suffered huge losses. Amazon lost 2.5%, while Best Buy lost 2.9%.

Investors received a new update on inflation Thursday. The Fed closely tracks inflation and reported that it rose 6.3% in May, which was unchanged from April’s level. Commerce Department report also saidConsumer spending increased at a slow 0.2% rate between April and May.

This update follows a troubling report that revealed that consumer confidence has fallen to its lowest point in 16 months. The government reported that the U.S. economic growth was 1.6% in quarter one. The key factor in that contraction was weak consumer spending.

Thursday’s decision by OPEC and allied producing countries to increase crude oil production was not a good sign. However, it will likely not help to reduce high gasoline prices at the pump or the energy-fueled inflation that is threatening the global economy.

In electronic trading on New York Mercantile Exchange, benchmark U.S. crude oil rose 50 cents to US$106.26 a bar in energy trading. Brent crude, an international standard, increased 63 cents per barrel to $109.66.

The U.S. dollar fell to 135.28 Japanese Yuan from 135.75 yen in currency trading. The euro was $1.0464 less than $1.0484.

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AP Business Writers Alex Veiga, Damian J. Troise, and Damian J. Troise all contributed.