The Taiwan stock market on Monday wrote a finish to the two-day losing streak that saw it shed more than 85 points or 1.6 percent. The Taiwan Stock Exchange broke back above 5,000 points and also beat resistance at 5,100 points - and now investors are hopeful for still more gains at the opening of trade on Tuesday.
The Asian markets draw a sharply positive global forecast, with major gains expected from the financial sector that has been so oversold in recent months - thanks to details on the U.S. plan to remove toxic assets. Some better than expected economic data out of the U.S. adds to the positive sentiment. The European markets finished sharply higher, as did the U.S. markets, and the Asian bourses are forecast to follow that lead.
The TSE finished sharply higher on Monday, thanks to major gains among the financial stocks and the technology issues. The textile stocks also finished higher, as did the construction, cement, paper and food sectors.
For the day, the index climbed 162.56 points or 3.27 percent to close at the daily high of 5,124.18 after dipping as low as 5,015.82. Volume was 4.55 billion shares worth 92.65 billion Taiwan dollars. There were 1,527 gainers and 398 decliners, with 120 stocks finishing unchanged.
Among the gainers, TSMC rose 5.5 percent, while ProMOS Technologies jumped 6.7 percent, Cathay Financial Holding climbed 3.7 percent and Fubon Financial rose 1.3 percent.
The lead from Wall Street is broadly positive as stocks moved sharply higher over the course of the trading day on Monday, with the major averages more than offsetting the losses posted in the two previous sessions to reach their best levels in over a month. The standout gains came after the Obama administration revealed its plan to help banks sell toxic assets.
The plan unveiled by Treasury Secretary Timothy Geithner will set up an investment fund to buy mortgage-related securities and other assets that are hurting the balance sheets of banks. The new Public Private Investment Program would combine taxpayer money with private funds, aiming to buy loans and free up banks to renew lending.
Geithner's plan involves using up to $100 billion in funds from the $700 billion financial rescue plan passed in 2008 in addition to capital from private investors to generate an estimated $500 billion to purchase the toxic assets, a number that could double to $1 trillion over time.
In economic news, existing home sales unexpectedly rose in the month of February, according to a report released by the National Association of Realtors, with sales rebounding after hitting a twelve-year low in the previous month. The report showed that existing home sales rose 5.1 percent to a seasonally adjusted annual rate of 4.72 million units in February from a pace of 4.49 million units in January. Economists had expected sales to slip to a 4.45 million unit rate.
Some of the strength on the day also came as investors reacted to Canadian integrated oil and natural gas companies Suncor Energy (SU) and Petro-Canada (PCZ) jointly announcing that the companies have agreed to merge in an all-stock deal. Furthermore, Walgreen (WAG) reported second quarter earnings that fell year-over-year but still pleased investors. Comparable stores sales increased 1.3 percent in the quarter, while comparable store front-end sales decreased 1.2 percent.
The major averages accelerated to the upside going into the close, ending the session at or near their best levels of the day. The Dow closed up 497.48 points or 6.8 percent at 7,775.86, the Nasdaq closed up 98.50 points or 6.8 percent at 1,555.77 and the S&P 500 closed up 54.38 points or 7.1 percent at 822.92.
In economic news, Taiwan will on Tuesday provide February data for export orders and industrial output. Exports are predicted to decline 29.4 percent on year following the 41.67 percent annual fall in January. Industrial output is called lower by 29.5 percent on year after the 43.11 percent drop in the previous month.
Also, Taiwan's commercial sales fell 8.23 percent year-on-year in February compared to a 19.12 percent decline in the previous month, the Department of Statistics, Ministry of Economic Affairs said on Monday. This was the fifth consecutive month of decline in commercial sales.
In February, wholesale trade sales fell 7.9 percent annually compared to a 27.38 percent drop in the previous month. Retail trade sales dipped 9.55 percent compared to a 0.29 percent decline in January. Sales from eating and drinking places were down 3.51 percent in the month, reversing the 4.67 percent rise in January.
Month-on-month, commercial sales decreased 3.58 percent in February reflecting a 19.19 percent drop in retail trade sales and a 4.29 percent fall in sales from eating and drinking places. However, wholesale trade sales rose 4.83 percent in the month.
Finally, Taiwan's Directorate-General of Budget, Accounting and Statistics said on Monday that the seasonally adjusted jobless rate rose to 5.63 percent in February from 5.33 percent in January. Economists were looking for a rate of 5.6 percent.
The labor participation rate fell to 57.98 percent from 58.03 percent, while the number of unemployed persons rose to 613,000 from 580,000 in the previous month.
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