Thursday, July 1, 2010

Japan Tankan Survey Turns Bullish

The 2nd largest economy finally turned bullish after 2 years. What Japan does hasn't been much of a factor in the markets for years. In the early 2000s, Japan was important to tech stocks but that market has been so stagnant for a long time that they've become irrelevant for nearly a decade. Whether or not this is a signal that the sleeping giant is about to awake is yet to be seen, but the growth in Asia ex-Japan could finally have a very positive impact on Japan.

Capital spending was also forecast up 4.4% which was significantly higher then the negative 0.4% forecast after March. Japan might return to a growth mode as the region around them soars. It might just be time to begin focusing on this lumbering giant again.

Growth in Japan could have a significant impact on Australia mining companies.. Japan lacks natural resources so just about all increases in GDP will require significant amounts of imported commodities. Stay tuned to this story as Japan could just as easily rollover yet again.

  • The headline index measuring big manufacturers' sentiment improved 15 points to plus 1 in June, the BOJ's closely watched tankan quarterly survey showed on Thursday. That was higher than a median market forecast of minus 4 and was the fifth consecutive quarter of improvement.
  • The index for September was seen at plus 3, showing firms expect conditions to improve further over the next three months.
  • In a sign the recovery was broadening, the survey showed big firms expect to increase capital spending by 4.4 percent for the year that started in April.
  • While that was smaller than the 4.9 percent rise forecast by economists, it was an improvement over the previous tankan that showed companies planned to cut spending by 0.4 percent. In the previous year that ended in March, big firms cut capital spending by 17 percent.

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