Asian shares track Wall Street drop as inflation fears drag on


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Conference Board reported that its consumer confidence index fell in June to its lowest level in more than a year, results that were much weaker than economists expected.

That in a moment.

First, the consumer confidence index in Japan dropped to an eighteen month low of 32.1 in June, down from May’s 34.1, and much lower than forcasts of 33. All sub-indexes were down. Employment perceptions were down 1.6 points to 37.4, consumer perceptions of overall livelihood were down 2.6 points to 29.8, views toward income growth were down 1.4 points to 35.8, and willingness to buy durable goods were down 2.6 points to 25.3. Reminder: A score above 50 indicates optimism, below 50 shows lack of confidence and 50 indicates neutrality.

Now the U.S. conference board. It came in at 98.7 for June, considerably lower than the forcast of 103.

Japan and the U.S. were not alone in declining consumer confidence. South Korea's consumer confidence fell by 6.2 points from the previous month to 96.4 in June, the lowest since January of 2021. Forcast was for 102,9. Declines were seen regarding current living standards, future outlook, prospective economic conditions, and prospective household income, while households’ inflation expectations for the year ahead rose to 3.9% from 3.3%, the highest since April 2012. CCSI above 100 indicates an improving outlook and below 100 a deteriorating outlook.

Consumers are generally looking ahead and not liking what they see.

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Investors are awaiting remarks expected for midweek by central bank leaders . . . They will also get another update on U.S. economic growth on Wednesday when the Commerce Department releases a report on first-quarter gross domestic product.

Expectations ahead of time are going down.

Two bell weather indicators were reported yesterday.

The U.S. Dallas Fed Services Index, the general business activity index for services in Texas, slipped to -12.4 in June of 2022, from 1.5 in the previous month, and well off the forcast reading of +3. It was the lowest reading since July 2020, suggesting activity in the Texas service sector deteriorated significantly. Also the Richmond Fed Services Index, for Service Sector Activity in the US fifth district, fell to -7 in June of 2022 from 8 in May, the lowest since December 2020, and well off the forcast of a reading of +9.

We await the numbers and speeches.

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The good news. The US GDP price index, measuring changes in the prices of goods and services produced, jumped 8.1% QoQ in the first three months of 2022, to 123.545 points, against an initial estimates of an 8% jump.

The bad news. The U.S. economy contracted an annualized -1.6% QoQ in the first three months of 2022, slightly worse than the -1.5% drop in the forcast estimate. It is the first contraction since 2020, due to a fall in exports, federal government spending, private inventory investment, and state and local government spending; while nonresidential fixed investment, PCE, and residential fixed investment increased.

The other anticipated news: U.S. Corporate Profits decreased -4.9% to 2402.90 USD Billion in 1Q 2022, from the previous +.2% of 2527.41 USD Billion in 4Q 2021. Forcast was for -4.3%.

Have a good day.

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