Latest news with #MarcelThieliant
CNBC
4 days ago
- Business
- CNBC
Japan's economy expands more than expected in second quarter despite U.S. tariff headwinds
Japan's economy expanded 0.3% in the second quarter of 2025, compared to the first three months of the year, as the country grappled with the volatile tariff policy out of the United States. This was compared to the revised 0.1% growth seen in the first quarter, and was higher than the 0.1% increase expected by economists polled by Reuters. On a year-over-year basis, Japan's GDP expanded 1.2% in the second quarter, falling short of the first quarter's 1.8% growth. The GDP reading comes as Japan struggled to cope with an uncertain trade environment in the second quarter, with the country only reaching a trade deal with the U.S. on July 23. The deal sees Japan face a 15% blanket tariff on all exports to the U.S., including automobiles. Throughout the second quarter, Japan was spared the 24% tariff that was announced on "Liberation Day," but had to face 25% duties on its key automobile sector. Auto exports to the U.S. are a cornerstone of Japan's economy, making up 28.3% of all shipments in 2024, according to customs data. Trade data from April to June revealed that exports to the U.S. had plunged year over year for all three months, with June seeing an 11.4% drop in shipments compared to the same period a year ago. Marcel Thieliant, head of Asia-Pacific at Capital Economics, noted that the 11.4% decline in exports to the U.S. was the largest since the start of the Covid-19 pandemic in 2020. After its July 31 meeting, the Bank of Japan upgraded its forecast for the country's economy to grow 0.6% in its 2025 fiscal year, running from April 2025 to March 2026. However, the central bank also cautioned that trade and other policies globally would lead to a slowdown in overseas economies, as well as a decline in domestic corporate profits.
Business Recorder
7 days ago
- Business
- Business Recorder
Australia dollar barely blinks at rate cut, more priced in
SYDNEY: The Australian dollar barely budged on Tuesday after the country's central bank cut interest rates as expected and stayed cautious on the outlook for more, leaving markets anticipating a three-month break until the next likely easing. In a unanimous decision, the Reserve Bank of Australia's policy board trimmed its cash rate by 25 basis points to 3.60%, a two-year low and the third cut in seven months. Markets had again been fully priced for an easing, having been badly stung by a steady decision on July, given core inflation had slowed toward the middle of the RBA's target band of 2% to 3% while unemployment had popped to its highest since late 2021 at 4.3%. Futures imply only a one-in-three chance of a further easing at the next meeting in September, with most analysts assume the RBA will chose to wait for the third-quarter inflation report due in late October before deciding whether to move in November. 'The Bank reiterated its view that it 'remains cautious about the outlook', which suggests that it will keep easing only once per quarter,' said Marcel Thieliant, head of Asia-Pacific economics at Capital Economics. 'Most importantly, the Bank endorsed market expectations of further loosening in its economic forecasts and we think it will ultimately slash rates to 2.85%.' Markets are fully priced for an eventual drop to 3.10% by early next year, with a small chance of reaching 2.85%. With so much baked in, the Aussie was little moved at $0.6515, having dipped overnight as its U.S. counterpart firmed broadly. Resistance lies around $0.6540 and $0.6625, with support at $0.6490 and $0.6419. The New Zealand dollar was steady at $0.5938, having also eased modestly overnight. Support lies around $0.5925 and $0.5857, with resistance at $0.5971 and $0.6059. Australian three-year bond futures were unchanged at 96.595, while 10-year yields dipped 1 basis points to 4.26%.
Business Recorder
08-07-2025
- Business
- Business Recorder
Australia dollar jumps as RBA shocks with steady rates
SYDNEY: The Australian dollar bolted higher on Tuesday after the country's central bank shocked investors by not cutting interest rates as had been widely expected, slamming a dovish debt market and pushing yields higher. The Reserve Bank of Australia ended a two-day meeting by holding its cash rate at 3.85%, confounding wagers for an easing to 3.60%. The monetary policy board voted six to three in favour of the steady outcome, a rare split, saying they wanted to see more data on inflation before moving. Still, the board did note that the risks to inflation were more balanced and appeared to be waiting for a reading on second quarter prices due at the end of July before deciding. 'The upshot is that barring a major upside surprise in the Q2 inflation data, we still expect a cut at the Bank's next meeting in August,' said Marcel Thieliant, head of Asia-Pacific economics at Capital Economics. 'That said, the risks are now tilted towards less easing than the 100bps of cuts we're forecasting over the coming twelve months.' Markets shifted to imply around an 85% chance the RBA would indeed cut to 3.60% at its Aug. 12 meeting, and now favours rates bottoming at 3.10% rather than 2.85%. Three-year bond futures quickly shed 13 ticks as bulls were squeezed out of a crowded long trade, while 10-year bond yields jumped 9 basis points to 4.28%. The Aussie bounced 0.8% to $0.6545, having shed 0.9% on Monday as the latest US tariff scare roiled markets. The currency had found support at $0.6485, while resistance is now around $0.6556. The kiwi dollar firmed 0.3% to $0.6017, after losing 0.8% overnight as risk assets recoiled. It drew support at $0.5990, but has to get back to $0.6056 to repair the damage. The Reserve Bank of New Zealand holds its policy meeting on Wednesday and markets imply an 80% chance it will keep rates at 3.25%, given it has already cut by 225 bps. Investors are looking for just one, or maybe two, more quarter-point reductions in this cycle. 'Provided there are no surprises to the RBNZ's forward indicators, this places a neutral to cautious bias on the interest rate outlook and this should be Kiwi dollar supportive,' said Mieneke Perniskie, a financial markets trader at Kiwibank.
Yomiuri Shimbun
01-07-2025
- Business
- Yomiuri Shimbun
Japan's Business Mood Holds up but US Tariff Worries Grow, Survey Shows
TOKYO, July 1 (Reuters) – Confidence among large Japanese manufacturers improved in the three months to June, a central bank survey showed, as firms maintained their bullish long-term spending plans, unfazed by the immediate potential hit from steep U.S. tariffs. However, manufacturers slashed their profit estimates and expect business conditions to worsen three months ahead, the closely watched 'tankan' survey showed on Tuesday, suggesting firms see pain from U.S. tariffs deepening later this year. Sentiment among big non-manufacturers worsened slightly as some companies worried about rising labor costs, the impact of higher prices on domestic consumption and softening demand for luxury goods among overseas tourists. The survey suggests the world's fourth-largest economy remains relatively resilient, even with increasing global trade uncertainty. It will be one of the data points the Bank of Japan scrutinizes at its next policy meeting on July 30-31. 'The Q2 Tankan survey showed that the economy is holding up well despite trade tensions, which supports our view that the Bank of Japan will resume its tightening cycle before the end of the year,' said Marcel Thieliant, head of Asia-Pacific at Capital Economics. The headline index measuring big manufacturers' business confidence stood at +13 in June, up from +12 in March and beating a median market forecast for a reading of +10. While some firms complained about the hit from U.S. tariffs and uncertainty over the country's trade policy, others saw profits improve as they passed on rising costs through price hikes, said a BOJ official briefing reporters on the survey. By contrast, an index gauging big non-manufacturers' sentiment edged down to +34 from +35 in March, matching median market forecasts, with companies citing a hit to profits from rising labor costs. Both big manufacturers and non-manufacturers expect business conditions to worsen three months ahead, the tankan showed. Japan's economy, which shrank an annualized 0.2% in the first quarter due to weak consumption, is bracing for further pain as U.S. tariffs hurt exports. Tokyo has so far failed to convince U.S. President Donald Trump's administration to scrap a 25% tariff on Japanese cars and a 24% tariff on other Japanese imports paused until July 9. PROFIT HIT Corporate activity is holding up, at least for now, despite the hit to exports. Big companies expect to increase capital expenditure by 11.5% in the current fiscal year ending in March 2026, up from a 3.1% gain projected in March and above a market forecast for a 10.0% rise. But many analysts expect the damage from U.S. tariffs on exports and output to intensify later this year, and complicate the BOJ's decision on when to resume interest rate hikes. A close look at the tankan shows the impact already being felt by some companies. Sentiment among big machinery and automobile makers – sectors directly hit by the tariffs – worsened in the third quarter. Among big manufacturers, exporters expect sales to rise just 0.6% in the current fiscal year ending in March 2026, sharply lower than a 4.4% gain in the previous year, the tankan showed. Manufacturers expect recurring profits to fall 8.4% in the current fiscal year after a 5.8% gain in 2024. 'Absent tangible improvements in domestic growth and the trade outlook, business sentiment won't stay afloat for long,' said Stefan Angrick, head of Japan and Frontier markets Economics at Moody's Analytics. 'Exports are weak, investment keeps slipping, and consumption is fragile, keeping Japan's economy teetering on the brink of recession. This will hold the Bank of Japan on the sidelines through year's end,' he said. The BOJ ended a decade-long, massive stimulus program last year and in January raised short-term interest rates to 0.5% on the view Japan was on the cusp of durably meeting its 2% inflation target. While the central bank has signaled readiness to raise rates further, the economic impact of higher U.S. tariffs forced it to cut its growth forecasts in May. Further muddling the policy outlook, consumer inflation has exceeded the BOJ's 2% target for more than three years as companies continue to pass on rising raw material costs. A slight majority of economists in a Reuters poll expect the BOJ's next 25-basis-point increase to come in early 2026.
Yahoo
01-07-2025
- Business
- Yahoo
Japan's business mood holds up but US tariff worries grow, survey shows
By Leika Kihara TOKYO (Reuters) -Confidence among large Japanese manufacturers improved in the three months to June, a central bank survey showed, as firms maintained their bullish long-term spending plans, unfazed by the immediate potential hit from steep U.S. tariffs. However, manufacturers slashed their profit estimates and expect business conditions to worsen three months ahead, the closely watched "tankan" survey showed on Tuesday, suggesting firms see pain from U.S. tariffs deepening later this year. Sentiment among big non-manufacturers worsened slightly as some companies worried about rising labour costs, the impact of higher prices on domestic consumption and softening demand for luxury goods among overseas tourists. The survey suggests the world's fourth-largest economy remains relatively resilient, even with increasing global trade uncertainty. It will be one of the data points the Bank of Japan scrutinises at its next policy meeting on July 30-31. "The Q2 Tankan survey showed that the economy is holding up well despite trade tensions, which supports our view that the Bank of Japan will resume its tightening cycle before the end of the year," said Marcel Thieliant, head of Asia-Pacific at Capital Economics. The headline index measuring big manufacturers' business confidence stood at +13 in June, up from +12 in March and beating a median market forecast for a reading of +10. While some firms complained about the hit from U.S. tariffs and uncertainty over the country's trade policy, others saw profits improve as they passed on rising costs through price hikes, said a BOJ official briefing reporters on the survey. By contrast, an index gauging big non-manufacturers' sentiment edged down to +34 from +35 in March, matching median market forecasts, with companies citing a hit to profits from rising labour costs. Both big manufacturers and non-manufacturers expect business conditions to worsen three months ahead, the tankan showed. Japan's economy, which shrank an annualised 0.2% in the first quarter due to weak consumption, is bracing for further pain as U.S. tariffs hurt exports. Tokyo has so far failed to convince U.S. President Donald Trump's administration to scrap a 25% tariff on Japanese cars and a 24% tariff on other Japanese imports paused until July 9. PROFIT HIT Corporate activity is holding up, at least for now, despite the hit to exports. Big companies expect to increase capital expenditure by 11.5% in the current fiscal year ending in March 2026, up from a 3.1% gain projected in March and above a market forecast for a 10.0% rise. But many analysts expect the damage from U.S. tariffs on exports and output to intensify later this year, and complicate the BOJ's decision on when to resume interest rate hikes. A close look at the tankan shows the impact already being felt by some companies. Sentiment among big machinery and automobile makers - sectors directly hit by the tariffs - worsened in the third quarter. Among big manufacturers, exporters expect sales to rise just 0.6% in the current fiscal year ending in March 2026, sharply lower than a 4.4% gain in the previous year, the tankan showed. Manufacturers expect recurring profits to fall 8.4% in the current fiscal year after a 5.8% gain in 2024. "Absent tangible improvements in domestic growth and the trade outlook, business sentiment won't stay afloat for long," said Stefan Angrick, head of Japan and Frontier markets Economics at Moody's Analytics. "Exports are weak, investment keeps slipping, and consumption is fragile, keeping Japan's economy teetering on the brink of recession. This will hold the Bank of Japan on the sidelines through year's end," he said. The BOJ ended a decade-long, massive stimulus programme last year and in January raised short-term interest rates to 0.5% on the view Japan was on the cusp of durably meeting its 2% inflation target. While the central bank has signalled readiness to raise rates further, the economic impact of higher U.S. tariffs forced it to cut its growth forecasts in May. Further muddling the policy outlook, consumer inflation has exceeded the BOJ's 2% target for more than three years as companies continue to pass on rising raw material costs. A slight majority of economists in a Reuters poll expect the BOJ's next 25-basis-point increase to come in early 2026. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
