RTTNews - The Taiwan stock market on Wednesday ended the two-day losing streak that had cost the market more than 440 points or 6.5 percent in that time. The Taiwan Stock Exchange has ended lower now in six of the last eight trading days and now is holding support at 6,450 points - although investors wonder if the market may fall back through that level at the opening of trade on Thursday.
The global forecast for the Asian markets is mildly negative as stocks could see a bit of a correction following major gains in the previous session. Mixed economic data and corporate news does little to reinforce sentiment - although the auto stocks could be in focus after Chrysler finalized its deal with Fiat. Commodities also may provide support. The European markets ended sharply higher, while the U.S. markets ended slightly in the red - and the Asian bourses are tipped to follow the latter lead.
The TSE finished modestly higher on Wednesday, thanks to bargain hunting among the tourism and financial sectors - while the technology shares also ended in positive territory.
For the day, the index was up 47.88 points or 0.75 percent to close at 6,462.27 after trading between 6,389.94 and 6,512.22. Turnover was 114.30 billion Taiwan dollars, with 1,217 decliners, 923 gainers and 165 stocks finishing unchanged.
Among the gainers, Formosa International Hotels was limit-up 7 percent, while Taiwan Semiconductor Manufacturing Co. rose 3.74 percent, United Microelectronics Corp. added 2.82 percent, AU Optronics added 1.60 percent, Chi Mei Optoelectronics gained 0.80 percent and Cathay Financials advanced 3.56 percent.
The lead from Wall Street is modestly negative as stocks showed a notable downturn following a strong start on Wednesday amid waning buying interest and disappointing results from a 10-year note auction. Nonetheless, the major averages were able to finish only slightly lower, as some traders picked up stocks at reduced prices later in the session.
The Treasury Department's auction of $19.0 billion worth of ten-year notes drew a higher than expected yield of 3.99 percent, raising concerns about the outlook for interest rates. At the same time, the bid-to-cover ratio, an indicator of demand, rose to 2.62 from 2.47 during the previous ten-year note auction in May. The bond market has been in focus recently, as traders have expressed concerns that interest rates have continued to rise despite the Federal Reserve's efforts to keep rates low through quantitative easing.
On the economic front, the Federal Reserve's Beige Book report indicated that conditions remained weak or deteriorated further during the period from mid-April through May. However, five of the twelve Fed districts noted a moderation in the downward trend, mitigating some market pessimism. While the Beige Book also said that contacts from several Fed districts indicated an improvement in their expectations, they do not see a substantial increase in economic activity through the end of the year.
Separately, a report from the Commerce Department showed that the U.S. trade deficit for the month of April came in modestly wider than in March, as the value of exports fell by more than the value of imports. The report showed that the trade deficit widened to $29.2 billion in April from a revised $28.5 billion in March. Economists had expected the deficit to widen to $29.0 billion from the $27.6 billion originally reported for the previous month.
In corporate news, the Supreme Court allowed the sale of Chrysler's assets to Italian automaker Fiat to move forward. In lifting a stay on the sale, the high court rejected a move by a group of plaintiffs, including three Indiana public pension organizations, to block the sale. Chrysler and Fiat have since closed their deal on Tuesday morning.
Meanwhile, the House Oversight and Government Reform Committee said it has subpoenaed the Federal Reserve for documents, including e-mails to and from Fed Chairman Ben Bernanke, to explore the genesis of Bank of America's December purchase of Merrill Lynch. On Thursday, the committee will host Ken Lewis, former Chief Executive Officer of Bank of America, as part of a growing investigation into whether government officials pressured the bank to withhold details about the deal from investors despite ballooning losses at the brokerage firm.
The major indices pared some of their losses late in the session but remained stuck in the red. The Dow closed down 24.04 points or 0.3 percent at 8,739.02, the NASDAQ closed down 7.05 points or 0.4 percent at 1,853.08 and the S&P 500 closed down 3.28 points or 0.3 percent at 939.15.
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