RTTNews - The losing streak has stretched to four sessions for the Taiwan stock market, which has surrendered more than 330 points or 5 percent along the way. The Taiwan Stock Exchange crashed through support at the 6,740-point plateau, but now analysts suggest that the market could stage a modest recovery at the opening of trade on Friday.
The global forecast for the Asian markets is broadly optimistic as the markets are expected to extend the gains that were nearly region-wide a day earlier. Financials and properties are predicted to continue their recovery from the savage selloff earlier in the week. The European and U.S. markets finished solidly higher, and the Asian markets are expected to track those gains.
The TSE finished modestly lower on Thursday, due to heavy losses among the construction and financial sectors. Paper stocks also fell under pressure, as did the food, textile, cement and technology stocks.
For the day, the index shed 55.35 points or 0.82 percent to finish at 6,733.23 after trading between 6,647.32 and 6,784.91. Volume was 3.53 billion shares worth 88.84 billion Taiwan dollars. There were 1,807 decliners and 544 gainers, with 131 stocks finishing unchanged.
The lead from Wall Street is firmly positive as stocks saw strong gains on Thursday, helped by some upbeat news from the manufacturing sector that helped to offset a disappointing jobs report. The major averages all finished in positive territory by solid margins, extending their gains for a third straight session.
Some buying interest was generated by the release of a report from the Philadelphia Federal Reserve saying that manufacturing activity in the mid-Atlantic region showed some signs of stabilization. The Philly Fed said its index of current activity rose to 4.2 in August from a negative 7.5 in July, with a positive reading indicating growth in the sector. Economists had been expecting a more modest increase to a negative 2.0. With the bigger than expected increase, the index rose above zero for the first time since September of 2008 and reached its highest level since November of 2007.
Separately, research group the Conference Board said that its leading economic indicators index increased for the fourth consecutive month in July, signifying a likely improvement in economic conditions in the near term. The index of leading economic indicators rose 0.6 percent in July following a 0.7 percent increase in June.
Earlier, the Labor Department released a report showing that first-time claims for unemployment benefits unexpectedly increased to 576,000 in the week ended August 15 from the previous week's revised figure of 561,000. The increase came as a surprise to economists, who had expected jobless claims to edge down to 550,000 from the 558,000 originally reported for the previous week. Despite the recent concerns regarding the battered labor market, the disappointing data saw little reaction.
On the earnings front, traders also digested quarterly results from Sears Holdings (SHLD), NetApp (NTAP), PetSmart (PETM), Rio Tinto Group (RTP) and Heinz (HNZ), among others.
The major averages reached new highs for the session in the final hour of trading, but they gave back some ground going into the close. The Dow closed up by 70.89 points or 0.8 percent at 9,350.05, the NASDAQ climbed by 19.98 points or 1 percent to 1,989.22 and the S&P 500 rose by 10.91 points or 1.1 percent to 1,007.37.
In economic news, Taiwan's economic downturn eased in the second quarter, prompting the government to upwardly revise its outlook for 2009. Gross domestic product fell 7.54 percent year-on-year in the second quarter, the Directorate General of Budget, Accounting and Statistics said on Thursday.
Economic contraction eased from a 10.13 percent decline in GDP in the first quarter, which was revised from a 10.24 percent fall reported earlier. Economists had forecast a 7.8 percent drop in GDP in the second quarter. Taiwan's GDP has been falling since the third quarter of 2008 and the economy fell into a recession in the fourth quarter.
As a result, the economy is now forecast to grow by 3.92 percent in 2010, in line with the expected global recovery. Also, the forecast for the consumer price index has been revised to show a fall of 0.68 percent in 2009 instead of an earlier prediction of a 0.84 percent decline. In 2010, inflation would be at 0.87 percent.
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