RTTNews - Ahead of the four-day weekend holiday marking the Dragon Boat Festival, the Taiwan stock market halted the two-day losing streak that had cost it more than 50 points or 0.8 percent in the process. The Taiwan Stock Exchange is closing on the 6,900-point plateau, and investors are hoping to push the market over that level of trade on Monday.
The global forecast for the Asian markets is optimistic thanks to positive economic and corporate releases at the end of last week. U.S. auto giant General Motors is expected to declare bankruptcy on Monday, although it has already been priced in by many of the markets - and it may affect auto stocks throughout the region. The European markets were mostly higher on Friday, and the U.S. bourses were sharply up - and the Asian markets are forecast to move higher as well.
The TSE finished sharply higher on Wednesday, thanks to solid gains among the financial stocks and the construction shares. The technology sector also gained, as did the paper, food and cement stocks. Textiles and plastics ended lower.
For the day, the index surged 207.33 points or 3.1 percent to close at 6,890.44 after trading between 6,930.59 and 6,743.39. Volume was 8.22 billion shares worth 223.54 billion Taiwan dollars. There were 1,802 gainers and 474 decliners, with 82 stocks finishing unchanged.
The lead from Wall Street is broadly positive as stocks saw some further upside over the course of the trading day on Friday after a considerable upward move in the previous session. A late-session rally helped the major averages to finish the month of May on a high note, further building on recent gains.
Early this morning, traders digested a revised May consumer sentiment report from Reuters and the University of Michigan that showed its best results in eight months. The revised reading came in at 68.7, higher than the previously reported reading of 67.9. The result was also higher than April's final level of 65.1. Analysts expected the survey to yield a reading of 68.0.
Separately, the Commerce Department said that gross domestic product for the first quarter contracted, although at a slower rate than previously estimated. Specifically, the data said that gross domestic product fell 5.7 percent in the first quarter compared to the advance estimate of a 6.1 percent decrease. Economists had been expecting the pace of contraction to be revised to 5.5 percent.
Meanwhile, optimism was limited by manufacturing data from the Chicago area that continued to show a notable slowdown in the region. The ISM-Chicago said its index of activity in the manufacturing sector fell to 34.9 in May from 40.1 in April, with a reading below 50 indicating a contraction. Economists expected the index to edge up to a reading of 42.0.
On the corporate front, automaker General Motors (GM) plans to file for bankruptcy protection on Monday, according to reports. Most of the company's assets would be sold to a new company sponsored by the U.S. Treasury Department. UAW-represented employees have ratified modifications to the GM-UAW 2007 national labor agreement. The amended agreement covers about 54,000 hourly employees located in 46 U.S. facilities and is expected to help GM restructure when it enters bankruptcy.
In other news, President Barack Obama announced the establishment of a cyber security office. The new office is expected to establish a system that will restrict outside access to government networks, which have been identified as an area of concern by the administration. In addition to announcing the new office, Obama also stated his goal for a new education initiative aimed at increasing awareness of cyber security threats.
The major averages soared in the last 30 minutes of trading, closing near their best levels of the day. The Dow closed up 96.53 points or 1.2 percent at 8500.33, the NASDAQ closed up 22.54 points or 1.3 percent at 1774.33, and the S&P 500 finished up 12.31 points or 1.4 percent at 919.14. The gains helped the major averages close higher for both the week and the month of May. The Dow rose 4.1 percent for the month, adding to the gains posted in both March and April. The NASDAQ and the S&P 500 posted monthly gains of 3.3 percent and 5.3 percent, respectively.
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