The Taiwan stock market bounced right back to the upside again on Wednesday, one session after it had ended the two-day winning streak in which it had collected more than 200 points or 3 percent. The Taiwan Stock Exchange finished just above the 7,330-point plateau, although now investors are bracing for renewed selling pressure when the market opens on Thursday.
The global forecast for the Asian markets is mixed to lower following the Federal Reserve's decision to extend Operation Twist. In the run-up to the FOMC's decision, markets had largely priced in some kind of additional stimulus - and that's what they got, although more was expected. Profit taking may be in order for some of the overbought regional bourses. The European markets were higher and the U.S. markets were mixed but little changed, and the Asian markets are tipped to follow the latter lead.
The TSE finished modestly higher on Wednesday following gains from the textile, plastic, finance, technology, paper, construction, textile and cement sectors.
For the day, the index collected 61.50 points or 0.84 percent to finish at the daily high of 7,334.63 after trading as low as 7,281.41 on turnover of 67.13 billion Taiwan dollars.
Among the gainers, Taiwan Semiconductor Manufacturing Co. climbed 1.37 percent, while Chimei Innolux jumped 2.07 percent, Far Eastern New Century spiked 3.17 percent and Nan Ya Plastics added 1.42 percent.
The lead from Wall Street provides little clarity as stocks saw considerable volatility on Wednesday as traders digested news of the Federal Reserve's decision to extend Operation Twist through the end of the year. Nonetheless, the markets largely held on to their recent gains.
Operation Twist involves replacing short-term securities in the Fed's bond portfolio with longer-term securities in an effort to push already low long-term interest rates even lower. Fed Chairman Ben Bernanke said that the move was a way the central bank could boost the economy even though the most traditional policy action, lowering interest rates, is not available.
Bernanke also noted that like many economic analysts and observers, their projections about the pace of the economic recovery had proved too optimistic. "The committee is prepared to take further actions if appropriate," to promote the recovery and provide for "sustainable improvement in labor market conditions," he added.
In corporate news, shares of Procter & Gamble (PG) fell 2.9 percent after the consumer products giant warned of weaker than previously expected Q4 results. P&G attributed the downwardly revised guidance to slower than expected market growth rates, market share softness in developed regions and negative impacts from foreign exchange rate changes.
The major averages bounced back and forth across the unchanged line before eventually ending the session mixed. While the NASDAQ crept up 0.69 points or less than a tenth of a percent to finish at 2,930.45, while the Dow edged down 12.94 points or 0.1 percent to end at 12,824.39 and the S&P 500 slipped 2.29 points or 0.2 percent to 1,355.69.
In economic news, Taiwan's export orders, an indicator of foreign trade growth at least in the next couple of months, dropped 3.04 percent year-on-year in May, the Ministry of Economic Affairs said on Wednesday.
This was slower than the 3.7 percent fall forecast by economists. In April, the rate of decline in overseas orders was 3.52 percent. On month, export orders rose 1.07 percent in May.
by RTT Staff Writer
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