The Taiwan stock market has ended lower now in consecutive sessions following the five-day winning streak that saw it collect more than 430 points or 8 percent. The Taiwan Stock Exchange fell through support at 5,300 points and now is clinging to the 5,200-point plateau - although analysts are calling it likely that the market will give up that level as well at the opening of trade on Tuesday.
The global forecast for the Asian markets is broadly negative, with continued pressure likely among the automobile stocks and the financial issues. The European and U.S. markets finished sharply lower on Monday and the Asian bourses are tipped to follow that lead - although the losses may not be quite as heavy, since the Asian markets already suffered sizeable losses in Monday's trade.
The TSE finished sharply lower on Monday, as investors continued to take profits from last week's winning streak. The financial stocks led the parade to the downside, while the technology issues also ended lower.
For the day, the index dumped 184.65 points or 3.40 percent to close at 5,206.05 after trading between 5,166.87 and 5,362.90 on turnover of 107.43 billion Taiwan dollars. There were 1705 decliners and 321 gainers, with 59 sticks finishing unchanged.
Among the decliners, Cathay Financial fell 6.9 percent, while Chinatrust Financial was down 6.7 percent and Hon Hai Precision was down 3.7 percent.
Wall Street offers another sharply pessimistic lead as stocks saw continued weakness throughout the trading day on Monday after moving sharply lower in early trading. While the major averages did not see much follow-through on their early downward move, they remained stuck firmly in negative territory. The weakness in the markets came as investors responded to disappointing news regarding the auto industry as well as renewed concerns about the outlook for the financial sector. Some traders also looked to cash in on the gains seen in the three previous weeks.
Much of the selling pressure came as President Obama and his auto task force indicated that General Motors (GM) and Chrysler have not gone far enough in their restructuring plans and need to step up their efforts to reorganize in order to receive additional government aid. While the administration will continue to provide operating funds for the next few weeks, it has given both GM and Chrysler a final deadline, threatening bankruptcy if the beleaguered auto giants do not significantly increase their efforts to restructure their business.
Additionally, at the request of the White House, Rick Wagoner has stepped down as chairman and CEO of General Motors, with Fritz Henderson, GM president and chief operating officer, set to replace Wagoner as CEO.
Financial stocks also experienced considerable weakness after Treasury Secretary Geithner suggested that more banks might need bailout funds. Appearing on the Sunday talk shows, Geithner explained that the ongoing stress tests for the financial industry have shown many other banks need funds from the TARP, although he said there is only about $135 billion left in the bailout pool.
Meanwhile, optimism surrounding this week's G20 summit has waned, as investors fear that earlier hopes that the countries will agree to a coordinated fiscal boost appear to have been crushed by skepticism in many European governments.
The major averages regained some ground going into the close of trading, but they remained firmly negative. The Dow closed down 254.16 points or 3.3 percent at 7,522.02, the Nasdaq closed down 43.40 points or 2.8 percent at 1,501.80 and the S&P 500 closed down 28.41 points or 3.5 percent at 787.53.
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