The Taiwan stock market has closed lower in two of three trading days since the end of the two-day winning streak in which it had collected more than 200 points or 3 percent. The Taiwan Stock Exchange finished just below the 7,280-point plateau, and now traders are expecting further losses when the market kicks off trade on Friday.
The global forecast for the Asian markets remains soft on disappointing economic data from around the globe. China's manufacturing sector performance continued to worsen with the factory activity entering an eighth month of contraction in June. Spain's borrowing costs climbed again at a debt auction on Thursday despite rising demand. In the United States, existing home sales fell more than expected, and Moody's downgraded 14 of the world's largest banks. The European and U.S. markets were sharply lower, and the Asian bourses are tipped to follow suit.
The TSE finished modestly lower on Thursday following losses from the finance, technology, cement, plastic, food, textile and paper sectors.
For the day, the index declined 55.58 points or 0.75 percent to finish at 7,279.05 after trading between 7,259.11 and 7,311.39 on turnover of 59.59 billion Taiwan dollars.
Among the decliners, Mega Financial shed 2.54 percent and First Financial lost 2.29 percent.
The lead from Wall Street is broadly negative as stocks moved sharply lower on Thursday after showing a lack of direction early in the session. A batch of disappointing U.S. economic data inspired traders to cash in on the gains from the past two weeks.
The sell-off followed a National Association of Realtors report showing that existing home sales fell by 1.5 percent to a seasonally adjusted annual rate of 4.55 million in May from 4.62 million in April. Economists had expected a slightly more modest decrease to an annual rate of 4.57 million.
A separate report from the Philadelphia Federal Reserve showed that its diffusion index of current activity fell to a negative 16.6 in June from a negative 5.8 in May, with a negative reading indicating a contraction in regional manufacturing activity.
Additionally, the Labor Department's report on initial jobless claims in the week ended June 16 showed that claims fell modestly but still beat estimates.
The release of the disappointing data came on the heels of the Federal Reserve's announcement Wednesday of the extension of its "Operation Twist" program until the end of the year. Fed Chairman Ben Bernanke also noted that the central bank is prepared to take additional steps to prop up the sluggish economy.
Among individual stocks, shares of Bed Bath & Beyond (BBBY) tumbled 17 percent after the home furnishings retailer reported better than expected first quarter earnings but provided disappointing guidance. With the loss, Bed Bath & Beyond fell to a three-month closing low.
The major averages saw further downside going into the close, ending the session just off their worst levels of the day. The Dow plunged 250.82 points or 2 percent to finish at 12,573.57, while the NASDAQ tumbled 71.36 points or 2.4 percent to end at 2,859.09 and the S&P 500 plunged 30.18 points or 2.2 percent to 1,325.51.
On the economic scene, Taiwan's central bank on Thursday decided to retain its key interest rates unchanged as expected, citing fragile global economic conditions. The Central Bank of the Republic of China (Taiwan) said it is maintaining the benchmark discount rate at 1.875 percent and the secured loan rate at 2.25 percent. The unsecured loan rate will also remain at 4.125 percent.
by RTT Staff Writer
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