The Taiwan stock market has stretched its winning streak to three sessions now, soaring more than 725 points or 13.5 percent in that span. The Stock Exchange of Taiwan crashed through resistance at 6,300 points to a seven-month closing high, and now investors are looking for more upside pressure at the opening of trade on Tuesday.
The global forecast for the Asian markets continues to be uniformly positive, with forecasts calling for extended gains throughout the region. Better than expected corporate results and economic data from the United States provide positive sentiment, with financials and commodities expected to continue to rise. The European and U.S. markets ended sharply higher, and the Asian bourses are predicted to follow suit - although some profit taking could take place.
The TSE finished sharply higher on Monday, fueled by hopes of increasing investment from mainland China and by gains among the financial shares.
For the day, the index jumped 337.83 points or 5.64 percent to close at 6,330.40 after trading between 6,256.29 and 6,356.29 on turnover of 164.6 billion Taiwan dollars.
Among the gainers, Innolux, TSMC, Chinatrust Financial and Cathay Financial all were limit-up 7 percent, while Far Eastone jumped 5.31 percent, HTC rose 6.92 percent, Hon Hai added 6.69 percent, AU Optronics gained 6.86 percent, Powerchip added 6.92 percent and Evergreen Marine surged 6.97 percent.
The lead from Wall Street is broadly positive as stocks moved sharply higher during trade on Monday, with traders reacting to the release of some better than expected economic data. The major averages extended the upward move seen last week, rising to multi-month closing highs. The strength in the markets came as the better than expected data generated some optimism about the outlook for the economy, particularly a recovery in the beleaguered housing market.
A report from the National Association of Realtors showed a significant increase in pending home sales, an indicator of future housing market activity. The increase came as many first-time buyers are taking advantage of historically good housing affordability conditions. The report showed that NAR's pending home sales index rose 3.2 percent in March following a revised 2.0 percent increase in February. Economists had expected the index to come in unchanged following the 2.1 percent increase originally reported for the previous month.
Separately, the Commerce Department released a report showing an unexpected increase in construction spending, which rose 0.3 percent in March following a 1.0 percent decrease in February. Economists had expected spending to fall by about 1.6 percent.
On the corporate front, shares of Sprint Nextel (S) turned in a strong performance after the telecom giant reported a wider first quarter loss compared to the year-ago period but reported an unexpected adjusted profit. Sprint Nextel reported a net loss for the quarter of $594 million or $0.21 per share compared to a loss of $505 million or $0.18 per share in the year-ago quarter. Excluding items, the company earned $0.03 per share compared to analyst estimates of a loss of $0.05 per share.
In other news, President Barack Obama discussed his administration's efforts to close tax loopholes in remarks Monday, pledging that his administration is working to reform the tax system and crack down on illegal overseas tax evasion. Obama said his administration's efforts to crack down on offshore tax evasion, which he called the largest tax scam in the world, would raised $210 billion over the next ten years.
The major averages saw some further upside going into the close, ending the session at or near their best levels of the day. The Dow closed up 214.33 points or 2.6 percent at 8,426.74, the NASDAQ closed up 44.36 points or 2.6 percent at 1,763.56 and the S&P 500 closed up 29.72 points or 3.4 percent at 907.24. With the gains, the NASDAQ ended the session at its best closing level in six-months, while the Dow and the S&P 500 set nearly four-month closing highs. The upward move also lifted the S&P 500 above the unchanged line for the year-to-date period.
In economic news, Taiwan will on Tuesday announce April figures for its consumer price index, wholesale price index and foreign reserves. CPI is expected to rise 0.48 percent on year after easing 0.15 percent in March. WPI is called lower by an annual 0.5 percent after easing 9.2 percent in the previous month. Foreign reserves are forecast at $299.73 billion, down from $300.12 billion a month earlier.
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