The Taiwan stock market on Monday wrote an emphatic finish to the modest two-day winning streak in which it had risen more than 115 points or 1.7 percent. The Taiwan Stock Exchange finished just below the 7,030-point plateau, and now investors are bracing for further damage when the market opens on Tuesday.
The global forecast for the Asian markets remains broadly negative thanks to increasing concerns over Europe, although the losses may be pared by bargain hunting following the heavy damage suffered in the previous session. Spain announced a ban on short sales of stocks for three months, while Italy banned short sales of stocks in the financial sector for one week. The European and U.S. markets were sharply lower, and the Asian bourses are tipped to open in the red again.
The TSE finished sharply lower on Monday following heavy losses from the technology, cement, textile, construction, plastic, finance, paper and food sectors.
For the day, the index plunged 135.95 points or 1.89 percent to finish at 7,028.73 after trading between 6,996.18 and 7,105.99 on turnover of 53.24 billion Taiwan dollars. There were 2,949 decliners and 997 gainers, with 209 stocks finishing unchanged.
Among the decliners, Taiwan Semiconductor Manufacturing Co. lost 3.13 percent, while Hon Hai Precision Industry dropped 3.35 percent and HTC Corp. plummeted 4.33 percent.
The lead from Wall Street remains brutal as stocks regained some ground over the course of the session after moving sharply lower at the start of trading on Monday, but still ended the day firmly in the red. The sell-off came as worries about the ongoing European debt crisis resurfaced amid indications that Spain may require a full bailout.
Contributing to the worries about Spain, the country's central bank said Spanish GDP fell by 0.4 percent in the second quarter following a 0.3 percent contraction in the first quarter.
Traders also expressed concerns about developments in Greece, with officials from the country's troika of international creditors due to visit Athens on Tuesday to review the progress Greece has made with respect to enacting reforms and austerity measures. The International Monetary Fund reportedly does not want to provide Greece with any additional financing.
The focus on Europe came amid a lack of major U.S. economic data. Nonetheless, some traders used the initial weakness on Wall Street as an opportunity to pick up stocks at reduced levels, contributing to the recovery attempt by the broader markets.
Among individual stocks, shares of McDonald's (MCD) came under pressure after the fast food giant reported second quarter earnings that fell year-over-year. McDonald's fell by 2.9 percent, pulling back further off last Thursday's two-month closing high.
The major averages moved roughly sideways going into the close of trading, stuck firmly in negative territory. The Dow fell 101.11 points or 0.8 percent to finish at 12,721.46, while the NASDAQ slid 35.15 points or 1.2 percent to end at 2,890.15 and the S&P 500 dropped 12.14 points or 0.9 percent to 1,350.52.
In economic news, Taiwan's unemployment rate in June was 4.24 percent, the Director-General of Budget, Accounting and Statistics said on Monday, down from 4.25 percent in May and 4.4 percent in June last year. This was forecast to rise to 4.3 percent. The unadjusted jobless rate rose to 4.21 percent in June from 4.12 percent in May. However, the rate was lower than 4.35 percent in June 2011.
Also, Taiwan's industrial production decreased 2.44 percent on an annual basis in June, the Ministry of External Affairs said on Monday, while economists were looking for a 0.5 percent increase. Month-on-month, production decreased 5.23 percent during the month.
Finally, Taiwan's commercial sales decreased 0.09 percent on an annual basis in June, the Ministry of Economic Affairs said on Monday, reversing the previous month's revised 2.66 percent increase. Economists expected sales to gain 0.7 percent annually.
Wholesale trade decreased 0.37 percent annually, after rising 2.12 percent in the previous month. Retail sales were higher by 0.54 percent year-on-year, slower than the 4.24 percent gain in May.
by RTT Staff Writer
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