Aurelia Butler

TOKYO (Reuters) – Confidence at big Japanese manufacturers fell in July for the first time in six months, the Reuters Tankan survey showed on Wednesday, in a sign of growing exporter concern about weakening overseas demand.Their index fell to plus 3 in July, from plus 8 in the previous month. Industries like steel, oil refining and food processing saw particularly large slumps in sentiment.Last month saw Asian factory activity drop, hurt by sluggish demand from China in particular. “The global economy is grappling with things like U.S.-China trade tension and the prolonged war in Ukraine, making for an uncertain outlook. At the same time, competition is intensifying both in domestic and overseas markets,” a machinery maker manager wrote in the comment section of the survey.The Reuters poll of 504 large companies, of which 255 responded, also saw many firms cite chip shortages and the elevated costs of raw materials as negative factors.The service-sector index fared much better, with the non-manufacturers index slipping just one point to +23, though it was a second straight month of decline.Retailers and real estate firms logged big jumps in confidence but sentiment at information and communications companies – while still robust – dropped somewhat.”Business is good because sales remain solid with restaurants, many of whom are our main customers, thanks to a rise in inbound tourism,” wrote a manager at a wholesale firm.The Reuters poll, conducted July 5-14, found corporate confidence was expected to rebound over the coming three months, with manufacturers’ sentiment seen at +7 and service sector sentiment seen at +25.The Reuters Tankan indexes, which can serve as leading indicators for the Bank of Japan tankan surveys, are calculated by subtracting the percentage of pessimistic respondents from optimistic ones. A positive figure means optimists outnumber pessimists. Respondents reply on condition of anonymity. More

The cost of UK motor insurance has soared to an all-time high, according to a closely watched index, heaping extra pressure on households already confronting a cost of living crisis.Motorists were quoted an average of £776 for motor policies in the second quarter, up a record 40 per cent on the previous year, according to an index from comparison site Confused.com and insurance broker Willis Towers Watson.“The price increases we’re seeing are so significant that it’s going to cause real financial impact to many people,” said Confused.com chief executive Steve Dukes, who called for insurers to be “as competitive as they can be” despite industry pressures. The second-quarter figure exceeded a previous 2011 peak of £663 to be the highest since the data set began in 2006. The methodology of the index was amended two years ago, with historic figures restated to be comparable.Matthew Upton, interim executive director of advocacy at consumer charity Citizens Advice, said consumers were facing “price hikes from every direction, including essential services”.The charity has estimated that one million people cancelled their car insurance last year as bills piled up, with those on universal credit especially likely to do so.“Car insurance is an everyday necessity for so many people, whether the car is needed to get to work, take children to school, or loved ones to appointments,” Upton said. “Now is the time for the government and insurance industry to consider bold ideas . . . to make sure no one is left stranded,” he added, suggesting discounted so-called social tariffs for people on benefits as an example. Prices in inner London, where motorists pay the most, have now reached an average of £1,257. Young people pay even more: male drivers aged 17 to 20 across the UK saw their premiums rise by 60 per cent to £2,414 on average, according to the index.Insurers argue significant price rises are essential given the inflation in the value of payouts on accident claims, which reflect the rising costs of labour, car parts and replacement vehicles. Tim Rourke, UK Head of P&C pricing, product, claims and underwriting at Willis Towers Watson, said insurers were having to deal with a “cocktail of rising costs”, including rising vehicle theft and long repair times, which are “all pushing costs above premium income and forcing insurers to play catch-up by increasing prices”. Rising costs have eviscerated profits for UK motor insurers. Last year represented the worst underwriting conditions in a decade, according to analysis from consultancy EY. Car insurance prices are expected to rise further: one recent industry forecast predicted they will not level off until 2025. Motor insurers will report their half-year results in the coming weeks. More

BRASILIA (Reuters) – Brazil’s government is considering changes to the taxation of closed-end funds and shareholder payouts in order to shore up revenue in next year’s budget, said three senior economic officials with direct knowledge of the matter.The government signaled on Tuesday it would propose a comprehensive income tax reform only after the Senate has passed a consumption tax reform that cleared the lower house of Congress this month.However, the sources, who requested anonymity to discuss internal deliberations, said the Finance Ministry now aims to break off key revenue-raising measures for early passage to bring Brazil’s primary budget deficit in 2024 to zero.The measures include a new model for taxing closed-end funds, changes to a federal income tax (CSLL) on state tax benefits and the end of “interest on equity” (JCP) payments allowing companies to deduct shareholder remuneration from their corporate tax obligations.The government sees those measures as crucial to raising revenue and complying with new fiscal rules in next year’s budget, which must be sent to lawmakers by the end of August.The Finance Ministry declined to comment.A more complex and structural reform, involving income tax exemptions, taxation of profits and dividends and reductions to payroll taxes, would be presented after the consumption tax reform clears the Senate, the sources said.”When the budget bill is sent, revenue measures to meet the targets must also be sent, and some of these measures will already appear in the proposal,” said one of the sources. “The idea is that this will be discussed throughout the second half of the year.”Closed-end funds offer favorable investment opportunities to wealthier Brazilians by taxing earnings only when they are distributed to investors. Previous governments have tried and failed to change that rule and eliminate “interest on equity” payments to shareholders used by companies to reduce taxable earnings. More

(Reuters) – A look at the day ahead in Asian markets from Jamie McGeever, financial markets columnist.Whatever is driving Wall Street higher – the finishing line of the Fed’s rate-hiking cycle, a falling dollar or strong earnings – it is not really filtering through to Asian markets.The disconnect between Asia and the rest of the world has widened recently, and correlations between the MSCI Asia ex-Japan index and leading U.S. and global indexes are the weakest in about a month.A solid batch of second quarter earnings from some of the largest U.S. banks and financial firms on Tuesday kept the U.S. stock market juggernaut rolling. Bulls in Asia will be hoping some of that momentum drives local trading on Wednesday.There is certainly room for catch up.The MSCI Asia equity index ex-Japan is up 4.6% this year, significantly underperforming the MSCI World index, S&P 500 and Nasdaq which are up 17%, 19% and 38%, respectively.Figures on Tuesday showed that U.S. retail sales in June were weaker than expected, but any concern about what that signals for the health of the economy was washed away by solid earnings at Bank of America (NYSE:BAC), Bank of New York Mellon (NYSE:BK) and others.As ever, China is the heaviest drag on Asia.Disappointing second quarter growth figures this week pushed the Chinese economic surprises index to its lowest in more than three years. Excluding the pandemic, the index is at its lowest since 2015 just before Beijing’s shock mini yuan devaluation.The economy’s sluggishness is even raising the prospect that China may be entering an era of much slower economic growth, and may never get rich.Whether it chugs ahead at 3% to 4% annually or flirts with Japan-like “lost decades” of stagnation, it looks set to disappoint its leaders, its youth and much of the world.More immediately, the whole gamut of U.S.-China tensions is back on investors’ radar – climate, defense and security, and semiconductors and tech.U.S. climate envoy John Kerry is in Beijing for a three-day visit, China’s defense minister Li Shangfu met veteran U.S. diplomat Henry Kissinger, and U.S. chip company executives met with top Biden administration officials to discuss China policy.In Thailand, meanwhile, parliament convenes on Wednesday to choose a new prime minister. Pita Limjaroenrat led his Move Forward party to election victory in May but failed last week to win the required backing of more than half of the legislature.Ahead of the vote, the Thai baht surged 1.6% on Tuesday to a two-month high against the dollar. It was the currency’s best day since November.Here are key developments that could provide more direction to markets on Wednesday:- Thailand parliament elects prime minister- New Zealand inflation (Q2)- UK inflation (June) (By Jamie McGeever; Editing by Josie Kao) More