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Continued Selling Pressure Called For Taiwan Stock Market

The Taiwan stock market has closed lower now in two straight sessions, giving away more than 140 points or 2 percent to a fresh 10-week closing low. The Taiwan Stock Exchange finished just above the 7,480-point plateau, and now traders are anticipating further damage when the market kicks off trade on Tuesday.

The global forecast for the Asian markets remains bleak, thanks largely to concerns from Europe. Of concern, the Spanish economy slipped back into recession in the first quarter of 2012, fueling concerns that the country may fail to meet the deficit targets. On the political front, investors worried that the turmoil in the Netherlands may cause the country to lose its AAA rating. The European and U.S. markets finished firmly in the red, and the Asian bourses are tipped to follow suit.

The TSE finished slightly lower on Monday following losses from the cement, construction, food, paper and textile sectors.

For the day, the index fell 26.06 points or 0.34 percent to finish at 7,481.09 after trading between 7,431.99 and 7,520.86 on turnover of 72.39 billion Taiwan dollars. There were 2,947 decliners and 1,167 gainers, with 307 stocks finishing unchanged.

Among the decliners, Largan Precision plummeted 6.79 percent, while Genius Electronic Optical dropped 6.46 percent, TPK Holding plunged 3.09 percent and Wintek Corp shed 1.35 percent.

The lead from Wall Street suggests further consolidation as stocks saw considerable weakness on Monday, although they ended the session well off their worst levels of the day. Troubling news from overseas weighed on the markets in early trading, but selling pressure waned as they day progressed.

Bank of Spain said that gross domestic product shrank 0.4 percent on quarter. This followed a 0.3 percent fall in the fourth quarter, which was the first decline in activity since the final three months of 2009.

Traders also reacted negatively to news that French President Nicolas Sarkozy came in second in a first round of voting, losing to socialist Francois Hollande. Sarkozy is expected to face an uphill battle in a run-off election against Hollande on May 6, raising concerns about a setback to efforts to diffuse the European debt crisis.

Among individual stocks, shares of Kellogg (K) came under pressure after the cereal market lowered its full-year 2012 financial guidance based on a weaker-than-expected first quarter performance. Kellogg fell by 6.1 percent to a two-month closing low.

Retail giant Wal-Mart (WMT) also posted a notable loss on the day, sliding by 4.7 percent after the New York Times reported on bribery allegations at the company's Mexico unit. Wal-Mart confirmed that it is probing possible violations of the U.S. Foreign Corrupt Practices Act.

Pfizer (PFE) posted a more modest loss after the drug giant announced that it has entered into an agreement to sell its infant nutrition business to Nestlé for $11.85 billion in cash.

The major averages climbed well off their lows for the session but still closed firmly in negative territory. The Dow closed down 102.09 points or 0.8 percent to finish at 12,927.17, while the NASDAQ fell 30.00 points or 1 percent to 2,970.45 and the S&P 500 dropped 11.59 points or 0.8 percent to 1,366.94.

In economic news, the seasonally adjusted unemployment rate in Taiwan was 4.14 percent in March, the statistical agency said on Monday, compared to 4.15 percent in February. Expectations were for an increase to 4.18 percent. The number of unemployed was stable at 468,000 compared to the previous month. The participation rate was steady at 58.29 percent.

Also, industrial production in Taiwan fell 3.42 percent year-on-year in March, the Ministry of Economic Affairs said on Monday - slower than the 6.75 percent drop forecast by economists. Manufacturing output fell 3.77 percent on year in March. Mining output declined 1.84 percent, while there was a 2.17 percent rise in electricity and gas supply.

Finally, the ministry's statistical arm said that commercial sales decreased 1.06 percent annually in March against forecast for a 0.04 percent growth. Wholesale sales fell 2.83 percent from last year, while there was a 3.35 percent growth in retail sales.

by RTTNews Staff Writer

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