RTTNews - The Taiwan stock market has extended its winning streak to four sessions, rising nearly 350 points or 5.2 percent on its way to a fresh eight-month closing high. The Taiwan Stock Exchange broke through resistance at 6,700 points, but now investors are bracing for a downside correction at the opening of trade on Thursday.
The global forecast for the Asian markets is slightly negative on fresh concerns that the worldwide economic slowdown may last longer than originally thought - which could put the financials under pressure. The price of crude oil rose back above $62 to a six-month high, which is expected to provide support for the commodity plays. The European markets provide a positive lead, while the U.S. markets all ended modestly in the red - and the Asian markets are also projected to trend lower.
The TSE finished modestly higher on Wednesday, as gains among the financials and the construction stocks were offset by weakness in the construction and technology sectors.
For the day, the index gained 48.03 points or 0.72 percent to close at 6,703.62 after trading between 6,590.79 and 6,740.75 on turnover of 191.56 billion Taiwan dollars. There were 1,170 gainers and 1,006 decliners, with 132 stocks finishing unchanged.
Among the actives, Taiwan Semiconductor Manufacturing Co fell 1.4 percent, while United Microelectronics Corp lost 1.1 percent, Farglory Land Development shed 4.5 percent, Taishin Financials soared 6.8 percent, Cathay Financials rose 5.11 percent and Hon Hai added 0.87 percent.
The lead from Wall Street is modestly pessimistic as stocks finished Wednesday's trading session modestly lower, unable to sustain earlier gains. The major averages all slipped into negative territory in mid-afternoon dealing, closing just off of their worst levels of the day. Trading this week has been largely subdued as many traders sat on the sidelines following considerable profit taking last week, prompted by the run up in equities in recent months.
Traders digested the latest minutes of the Federal Open Market Committee released earlier this afternoon, which revealed some debate within the policymaking arm of the Federal Reserve over whether or not to purchase additional treasury securities. Although the final decision was to stick with the $300 billion agreed on at the March meeting, in late April some officials thought that purchasing more could spur recovery. While there was some debate over whether or not additional purchases would be needed, officials agreed that such a purchase was not warranted at that time.
Earlier, traders heard comments from treasury Secretary Timothy Geithner who issued cautious optimism regarding the recovery of the embattled financial sector, while Bank of America (BAC) was able to raise a substantial amount of capital, further bolstering prospects for the industry. The day's trading was also impacted by better-than-expected earnings from Target (TGT) and Deere (DE).
In other news, the House of Representatives passed a landmark credit card industry reform bill Wednesday afternoon, sending legislation designed to crack down on the credit card industry to President Barack Obama. The 361-64 vote sends the bill Obama's desk and he is expected to sign it as early as Friday.
The major averages all closed slightly lower a late day selloff dragged the indices into negative territory. The Dow closed lower by 52.81 points or 0.62 percent to finish at 8422.04, while the NASDAQ was down 6.70 points or 0.39 percent to end at 1727.84, and the S&P 500 slipped by 4.66 points or 0.51 percent to finish at 903.47.
In economic news, Taiwan will on Thursday provide gross domestic product numbers for the first quarter of 2009. Analysts are predicting a contraction of 9.26 percent on year after the 8.4 percent decline in the previous three months.
Also, Taiwan logged a current account surplus of US$12.99 billion in the first quarter, higher than a surplus of US$8.47 billion in the same period last, a report from the Central Bank showed Wednesday. Economists expected the surplus to be US$10.5 billion.
During the quarter, the surplus in the goods account increased to US$9.04 billion from US$4.27 billion, while the services account recorded a surplus of US$0.6 billion, in contrast to a deficit of US$0.01 billion last year. Further, the current transfers account showed a smaller deficit of US$0.54 billion compared to US$0.9 billion deficit last year. On the other hand, the income account surplus decreased to US$3.9 billion from US$5.1 billion in the previous year.
Meanwhile, the capital account showed a deficit of US$0.02 billion in the first quarter, lower than a deficit of US$0.27 billion in the same period last year. At the same time, the financial account logged a deficit of US$1.7 billion, reversing from a surplus of US$0.7 last year.
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