RTTNews - The Taiwan stock market has finished lower now in two straight sessions, plummeting more than 440 points or 6.5 percent in that time. The Taiwan Stock Exchange has ended lower now in six of the last seven trading days and now is clinging to support at 6,400 points - although analysts are predicting the beginnings of a modest recovery on Wednesday.
The global forecast for the Asian markets is slightly positive, with the financial shares expected to stage a minor rally while the automobile producers may see some caution. Some lukewarm economic data out of the United States may slightly boost sentiment, as might commodities on a weaker greenback. The European markets were mixed, while the U.S. bourses ended generally higher - and the Asian markets are also expected to trade in mixed fashion.
The TSE finished sharply lower again on Tuesday, thanks to major declines in the paper and construction sectors. The financial, textile and cement stocks also ended significantly lower, while the food, technology and plastics stocks ended with more modest losses.
For the day, the index dropped 213.63 points or 3.22 percent to close at 6,414.39 after trading between 6,394.34 and 6,640.44. Volume was 5.96 billion shares worth 159.12 billion Taiwan dollars. There were 1,997 decliners and 338 gainers, with 60 stocks remaining unchanged.
Among the decliners, China Airlines fell 4.4 percent, while Huaku Development shed 6.9 percent, Formosa International lost 6.7 percent, Farglory Group fell 6.84 percent and Taiwan Semiconductor Manufacturing Co. was down 0.88 percent.
The lead from Wall Street is cautiously optimistic as stocks showed some life in afternoon trading on Tuesday, finishing largely on the upside after being plagued by choppy trading for much of the session. The NASDAQ and S&P 500 saw some strength on the day, while the Dow drifted lower just before the closing bell.
The U.S. Department of Treasury announced that 10 of the largest U.S. financial institutions borrowing money from the Treasury are planning on paying back their loans. Organizations such as JP Morgan Chase (JPM), U.S. Bancorp (USB) and Bank of New York Mellon (BK) will repay a total of $68 billion.
President Barack Obama praised the move, noting that the government has turned a profit from the first round of repayments. He also offered cautious optimism that the financial system is stabilizing. While Obama said that the announcement that banks are relying less on Treasury assistance is welcome news, he said it does not excuse the actions of the banks. The president also announced his intention to instate the pay as you go program, restricting the amount of money lawmakers can spend to only what they can save in other areas.
On the economic front, wholesale inventories fell by a little more than expected in the month of April, according to a report released by the Commerce Department on Tuesday, with the report also showing a modest decrease in wholesale sales. The report showed that wholesale inventories fell 1.4 percent in April following a revised 1.8 percent decrease in March. Economists had expected inventories to decrease by about 1.1 percent compared to the 1.6 percent drop originally reported for the previous month.
Additionally, the Commerce Department said that wholesale sales edged down 0.4 percent in April after falling by a more significant 2.4 percent in March. Wholesale sales were down 19.5 percent compared to the same month a year ago.
In corporate news, bankrupt automaker Chrysler's planned asset sale to a group led by Italian automaker Fiat was thrown into uncertainty after a U.S. Supreme Court Justice issued a stay on the sale. The stay was sought by a group of Indiana pension funds.
General Motors Corp. (GMGMQ.PK) also announced that Edward Whitacre Jr., former chairman and Chief Executive Officer of AT&T (T) would become chairman of the new GM when the company is re-launched later this summer. Kent Kresa will continue to serve as interim chairman until the launch.
Stocks finished the day mostly higher, led by gains in the technology sector. The tech-heavy NASDAQ closed up by 17.73 points or 1 percent at 1,860.13 and the S&P 500 rose 3.29 points or 0.4 percent to 942.43, while the Dow slipped by 1.43 points or less than a tenth of a percent to 8,763.06.
In corporate news, Taiwan-based semiconductor foundry United Microelectronics Corp. said that revenues for May declined 12.69 percent to NT$7.51 billion from NT$8.61 billion in the same period last year. On a sequential basis, May revenue rose 9.26 percent. For the period from January to May 2009, the company's revenue plunged 38.66 percent to NT$25.23 billion from NT$41.13 billion in the year-ago period.
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