RTTNews - The Taiwan stock market wrote an abrupt finish to the two-day winning streak in which it had collected more than 70 points or 1 percent along the way. The Taiwan Stock Exchange is clinging to support at the 6,930-point plateau, and now investors are anticipating that the market will fall through that level and may even give up the 6,900-point level by the opening of trade on Tuesday.
The global forecast for the Asian markets is broadly pessimistic as markets around the world plunged on fears that an economic recovery is not quite as close as many had believed. Resource stocks are expected to see continued pressure - particularly the steel, oil and gold stocks - while the financials and properties also are forecast to see heavy selling pressure. The European and U.S. markets were sharply lower, and the Asian markets are tipped to follow that lead.
The TSE finished sharply lower on Monday, thanks to heavy losses among the financials and the technology stocks - although the steel sector outperformed to limit the losses.
For the day, the index shed 137.70 points or 2 percent to close at the daily low of 6,931.80 after peaking at 7,051.78.
Among the actives, Lucky Cement Corp and China Steel Structure both were up by the 7 percent daily limit, while Cathay Financial Holding lost 2.5 percent, Fubon Financial Holding shed 1.6 percent and First Steamship was off 2.7 percent.
The lead from Wall Street is brutally negative as stocks saw a sharp pullback on Monday, with last week's disappointing data on the health of the consumer sparking a broad-based sell-off in equities. The major averages all finished substantially lower, as some speculated that the markets rose in spite of weak fundamentals.
Also deflating traders' mood was news that Lowe's (LOW) second quarter earnings and revenues fell short of estimates. The home improvement retailer also provided disappointing guidance.
Nonetheless, some of the pessimism was moderated by the release of a report from the Federal Reserve Bank of New York showing that conditions for New York manufacturers improved for the first time in well over a year in the month of August. The New York Fed said its general business conditions index rose to 12.1 in August from a negative 0.6 in July, with a positive reading indicating an expansion in the manufacturing sector. Economists had been expecting the index to increase more modestly to 3.0.
Stocks rose by a modest margin after the National Association of Home Builders released its report on homebuilder confidence in the month of August, showing that its homebuilder confidence index rose to its highest level in over a year. The report showed that the NAHB/Wells Fargo Housing Market Index rose to 18 in August from 17 in July. With the increase, which came in line with economist estimates, the index rose to its highest level since June of 2008.
The major averages remained stuck in the red going into the close, finishing near their worst levels of the day. The Dow closed down by 186.06 points or 2 percent at 9,135.34, the NASDAQ fell by 54.68 points or 2.8 percent to 1,930.84 and the S&P 500 slipped by 24.36 points, or 2.4 percent to 979.73.
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