Reuters Tankan hits highest manufacturing reading since March on chip boom

Japan’s latest Reuters Tankan survey points to improving business sentiment, which is supportive for the Japan 225 as it signals healthier corporate conditions and a more constructive economic backdrop. Manufacturer sentiment rose to +18 in August from +13 in July, the strongest since March 2026, driven mainly by semiconductor demand and broader strength in chemicals, metal and machinery. Non-manufacturers also improved to +28 from +25, reflecting resilient domestic consumption and broad gains in services. However, the three-month outlook for manufacturers eased slightly to +16, suggesting some caution ahead. The report reinforces the view that chip-related demand is spreading across Japan’s industrial base, while autos remain a laggard. Overall, the data is mildly positive for Japanese equities and may support expectations for the Bank of Japan’s upcoming quarterly Tankan, though it does not yet imply a major shift in policy.