Bank of Japan Governor Haruhiko Kuroda warned during June that a second wave of COVID-19 infections could cause “considerable” harm to Japan’s economy. He emphasised the importance of ensuring corporate financing whilst remaining vigilant towards the growth expectations – and hence the confidence – of businesses and consumers.
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- Fears of a “second wave” are hampering recovery
- Australia’s economy slipped into recession in Q2
- China adopted sweeping new powers over Hong Kong
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Bank of Japan (BoJ) Governor Haruhiko Kuroda warned during June that a second wave of COVID-19 infections could cause “considerable” harm to Japan’s economy. He emphasised the importance of ensuring corporate financing whilst remaining vigilant towards the growth expectations – and hence the confidence – of businesses and consumers.
“The Australian economy is going through a very difficult period” (RBA Governor Philip Lowe)
Economic recovery remains far off for Japan at present, according to IHS Markit. Although COVID-19 restrictions have eased, there are no signs of “robust recovery” in the offing, and the risk of a “second wave”, combined with a weak global trade backdrop and ongoing international travel restrictions are likely to hamper economic recovery and growth.
The Nikkei 225 Index rose by 1.9% during June but fell by 5.8% over the first half of the year. Elsewhere, the broader-based Topix Index declined by 0.3% over the month and by 9.4% over the year to date. In comparison, the TSE Second Section Index – which is more exposed to medium-sized Japanese companies – climbed by 7.2% during June and declined by 9.3% over the first six months of the year.
Activity picked up in Australia during June, according to IHS Markit, but the upturn proved insufficient to prevent the country from slipping into recession during the second quarter. Australia had already posted negative growth of -0.3% in the first three months of the year following a wave of devastating bushfires.
Governor of the Reserve Bank of Australia Philip Lowe said: “The Australian economy is going through a very difficult period and is experiencing the biggest economic contraction since the 1930s … it is likely that this fiscal and monetary support will be required for some time”. Meanwhile, RBA Deputy Governor Guy Debelle warned that Australia’s economy is likely to require “considerable” support for some time to come and called on the country’s government to continue its fiscal stimulus beyond September. Cases of COVID-19 spiked in Victoria towards the end of the month, and the ASX All Ordinaries Index rose by 2.2% during June, having fallen by 11.8% over the first six months of the year.
Investor sentiment around the world was rattled as China passed a controversial new national security law that gives it sweeping new powers over Hong Kong. The Hang Seng Index rose by 6.4% during June but declined by 13.3% over the first half of the year.
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