The Taiwan stock market has finished higher in three of five trading days since ending the four-day winning streak in which it gathered more than 430 points or 8 percent on its way to a fresh seven-month high. The Taiwan Stock Exchange is nearing resistance at 5,900 points, and analysts predict that the market will punch through that barrier in Wednesday's trade.
The global forecast for the Asian markets is fairly optimistic, despite some weaker than expected corporate earnings news. But the financials are expected to climb following positive comments from U.S. Treasury Secretary Timothy Geithner. The European markets were mixed and largely near the unchanged line, while the U.S. markets ended sharply higher - and the Asian markets are tipped to land somewhere in between.
The TSE finished sharply higher on Tuesday, after opening lower by 2 percent. Tourism shares finished sharply higher, as did the property stocks, construction shares, financial issues, steel stocks and technology shares.
For the day, the index jumped 99.75 points or 1.73 percent to close at the daily high of 5,881.41 after slipping as low as 5,663.56 on turnover of 122.4 billion Taiwan dollars.
Among the gainers, Chi Mei, Cathay Real Estate and Leofoo Development all were up by the 7 percent daily limit, while Ambassador Hotel gained 4.56 percent, Cathay Financial rose 2.72 percent, AU Optronics added 4.95 percent and China Steel was up 3.76 percent. Bucking the trend, Chunghwa Telecom eased 0.16 percent.
Wall Street offers a broadly positive lead as stocks showed a strong upward move over the course of the trading day on Tuesday, partly offsetting the steep losses posted in the previous session. While stocks saw initial weakness on disappointing earnings news, a positive reaction to comments from Geithner drove the markets higher.
The initial weakness came after Dow component Merck (MRK) reported first quarter earnings that fell short of analyst estimates and lowered its full year revenue guidance. Caterpillar (CAT) also slashed its full-year guidance, although it reported much better than expected adjusted first quarter earnings.
In other earnings news, chemical giant DuPont (DD) reported first quarter earnings that fell year-over-year and lowered its full-year guidance. The company's downwardly revised earnings guidance brought it in line with analyst estimates.
The turnaround by the markets was partly due to comments from Geithner, who assured the Congressional Oversight Panel that there is enough money left in the government's $700 billion financial rescue program to stabilize the financial system. Geithner said there is at least $134.4 billion in funds left. The Treasury Secretary also said that the vast majority of U.S. banks have enough capital and hinted that the credit markets may be thawing following their deep freeze.
Indicators on interbank lending, corporate issuance and credit spreads generally suggest improvements in confidence in the stability of the system and some thawing in credit markets, Geithner said.
The major averages moved to the upside going into the close, ending the session at or near their best levels of the day. The Dow closed up 127.83 points or 1.6 percent at 7,969.56, the NASDAQ closed up 35.64 points or 2.2 percent at 1,643.85 and the S&P 500 closed up 17.69 points or 2.1 percent at 850.08.
In economic news, Taiwan will on Wednesday release March figures for commercial sales and unemployment. Commercial sales are expected to contract 10.11 percent on year after the 8.23 percent annual fall in February. The seasonally adjusted unemployment rate is forecast at 5.8 percent, up from 5.63 percent a month earlier.
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