The Taiwan stock market has closed lower now in two straight sessions, plunging almost 200 points or 2.6 percent en route to an 11-week closing low. The Taiwan Stock Exchange finished just above the 7,585-point plateau, and now investors are expected to go hunting for bargains when the market kicks off trade on Wednesday.
The global forecast for the Asian markets is broadly positive, thanks to encouraging signs of health for the global economy. The International Monetary Fund raised its global growth projections for this year and next, citing improvements in the U.S. economy and emerging economies. Also positive was Tuesday's successful Spanish debt auction, in which Spain sold 3.2 billion euros worth of twelve and eighteen-month bills. The European and U.S. markets finished sharply higher and the Asian bourses are expected to follow suit.
The TSE finished sharply lower on Tuesday following losses from the technology, construction, paper, textile, plastics, finance, food and cement sectors.
For the day, the index plummeted 143.99 points or 1.86 percent to finish at the daily low of 7,585.87 after peaking at 7,752.10 on turnover of 86.36 billion Taiwan dollars.
Among the decliners, Largan Precision shed 3.68 percent, while Hon Hai Precision lost 3.93 percent, TPK plunged 6.48 percent, HTC plummeted 6.19 percent, Prince Housing retreated 3.96 percent and Shinkong Textile fell 2.73 percent.
The lead from Wall Street is upbeat as stocks moved sharply higher on Tuesday as traders reacted positively to news out of Europe and the latest batch of quarterly results.
The rally followed a successful Spanish debt auction. Spain sold 3.2 billion euros worth of twelve and eighteen-month bills, above the target of 3 billion euros. While the yields were well above last month, the auctions attracted improved demand. The results of the bond auctions contributed to a drop in Spanish bond yields and offset some of the recently renewed concerns about the European debt crisis.
Upbeat earnings news also generated positive sentiment, with shares of Coca-Cola (KO) rising by 2.1 percent after the beverage giant reported first quarter earnings that rose to $0.89 per share from $0.82 per share in the same quarter a year ago, beating estimates for $0.87 per share.
Goldman Sachs (GS) also reported better than expected first quarter earnings and announced an increase in its quarterly dividend to $0.46 per share. While Johnson & Johnson (JNJ) also reported stronger than expected earnings growth, the healthcare giant reported a modest drop in sales.
Meanwhile, traders largely shrugged off disappointing U.S. economic data, including a Commerce Department report showing that housing starts fell 5.8 percent to an annual rate of 654,000 in March from the revised February estimate of 694,000. Economists had expected starts to rise to an annual rate of 700,000.
Also, the Commerce Department said building permits rose 4.5 percent to an annual rate of 747,000 in March from the revised February rate of 715,000. With the increase, building permits rose to their highest level since September of 2008. A separate report from the Federal Reserve showed that industrial production unexpectedly came in unchanged for the second consecutive month in March.
The major averages moved roughly sideways going into the close, ending the session near their best levels of the day. The Dow jumped 194.13 points or 1.5 percent to finish at 13,115.54, while the NASDAQ soared 54.42 points or 1.8 percent to end at 3,042.82 and the S&P 500 surged 21.21 points or 1.6 percent to 1,390.78.
by RTT Staff Writer
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