The Taiwan stock market has now finished higher in five straight sessions, adding more than 950 points or 17 percent on its way to a seven-month closing high. The Stock Exchange of Taiwan is closing on resistance at 6,600 points, and investors are optimistic that the market might see further gains at the opening if trade on Thursday.
The global forecast for the Asian markets is positive, although investors are likely to be nervous ahead of Thursday's results of the stress test for U.S. banks, and the U.S. non-farm payroll data on Friday. Also, several of the Asian markets are overdue for a downward correction on profit taking. Better than expected corporate and economic news sent the European and U.S. markets broadly higher, and the Asian bourses are also expected to trade more modestly to the upside.
The TSE finished sharply higher again on Wednesday, fueled by optimism of closer ties with mainland China. Automobile stocks led the gainers, while financial and construction shares also finished higher.
For the day, the index climbed 186.76 points or 2.93 percent to close at 6,566.70 after trading between 6,372.94 and 6,570.50 on turnover of 240.13 billion Taiwan dollars.
Among the gainers, Yuanta and Chinatrust Financial both were limit-up 7 percent, while Yulon Motor was up 6.86 percent, Cathay Financial added 2.72 percent, Taishin rose 4.08 percent and Epistar rose 5.1 percent.
Wall Street offers an optimistic lead as stocks moved mostly higher over the course of the trading day on Wednesday, with traders reacting positively to some much better than expected economic data as well as reports suggesting that several of the financial companies examined by the government don't need additional capital.
Some initial strength was generated by the release of a report from payroll giant Automatic Data Processing (ADP) showing a much smaller than expected decrease in private sector employment in the month of April. The report showed that non-farm private employment fell by 491,000 jobs in April following a revised decrease of 708,000 jobs in March. Economists had expected a decrease of 645,000 jobs compared to the loss of 742,000 jobs originally reported for the previous month.
While the data points to continued weakness in the labor market, it presents another sign that the economy is stabilizing and generated some optimism about the Labor Department's monthly employment report due to be released on Friday - which is expected to show a decrease of less than 500,000 jobs.
The markets also benefited from media reports saying that the government stress tests of the nation's leading financial firms have determined that JP Morgan (JPM), Goldman Sachs (GS), American Express (AXP), and Bank of New York Mellon (BK) will not need additional capital. At the same time, reports have suggested that Bank of America (BAC), Citigroup (C), and Wells Fargo (WFC) will be asked to raise additional capital. While the official results are not due to be released until after the close of trading on Thursday, the leaks generated some optimism about the outlook for the financial sector.
In other news, shares of Disney (DIS) saw considerable strength after the entertainment giant reported second quarter earnings that fell sharply year-over-year but reported adjusted earnings that came in above analyst estimates. Disney reported adjusted second quarter earnings of $0.43 per share compared to analyst estimates of $0.40 per share. At the same time, the company said its revenue edged down 7 percent to $8.09 billion, slightly below analyst estimates of $8.15 billion.
While the NASDAQ underperformed the Dow and the S&P 500 by a wide margin, the major averages all closed firmly positive. The Dow closed up 101.63 points or 1.2 percent at 8,512.28, the NASDAQ closed up 4.98 points or 0.3 percent at 1,759.10 and the S&P 500 closed up 15.73 points or 1.7 percent at 919.53.
In economic news, the International Monetary Fund said on Wednesday that Asia is set for a sharp deceleration in growth this year and would see a tepid recovery in 2010. The IMF expects Asian growth to fall sharply to 1.3 percent in 2009 from 5.1 percent in the previous year. The region's growth is expected to rebound in 2010 at a rate of 4.3 percent. In February, the lender had predicted 2.7 percent growth for 2009. The IMF sees GDP declines in Japan, Australia, New Zealand, Hong Kong, South Korea, Singapore, Taiwan, Malaysia and Thailand this year. The worst decline is forecast for the city-state economy of Singapore, which is expected to shrink 10 percent this year.
Also, Taiwan is scheduled to release April numbers for imports, exports and trade balance on Thursday. Analysts are predicting that imports will fall 37.9 percent on year after the 49.5 percent annual decline in March. Exports are called lower by 28.3 percent on year after the 35.7 percent annual contraction in the previous month. The trade balance is expected to come in higher by 2.15 percent on year after the 3.41 percent annual expansion a month earlier.
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