The headline figure of the Bank of Japan's Tankan business sentiment survey has come in better than expected. The survey, revealed overnight, has improved on eased concerns over the US economy and the spread of SARS. "All concerns, such as the outlook for the US economy and the spread of SARS, have been fading (in the April-June quarter). This is why the headline figure of the Tankan came in better than expected," one expert said.
"In addition, the stock market was bullish during the period. This was also reflected in the improvement (in the headline figure)," he added. The BoJ's diffusion index for large manufacturers came in at minus 5, better than the market consensus of minus 10. Market sentiment is still, however, not overly optimistic about the outlook for business. "As Japanese firms keep relying on their restructuring efforts to generate profits amid falling sales, it is uncertain whether they can keep increasing their profits in the long term," Orimi said //www.fxcentre.com