The Taiwan stock market has closed lower now in back-to-back sessions, retreating more than 200 points or 2.6 percent along the way. The Taiwan Stock Exchange remained just above the 7,550-point plateau, and now traders are bracing for further selling pressure when the market kicks off trade on Tuesday.
The global forecast for the Asian markets remains bleak thanks to continued debt concerns out of Europe - and those are exacerbated since the U.S. markets were off on holiday. Financial shares are expected to see further consolidation, along with properties and technology stocks - while investors may continue to look at gold as a safe haven. The European markets were very sharply lower and the Asian markets are also expected to track lower.
The TSE finished sharply lower on Monday following losses from the technology, financial, construction, cement, textile and food sectors.
For the day, the index plummeted 205.49 points or 2.64 percent to finish at 7,551.57 after trading between 7,538.58 and 7,637.9 on turnover of 88.347 billion Taiwan dollars. There were 3,124 decliners and 1,048 gainers, with 250 stocks finishing unchanged.
Among the decliners, Nanya Technology, Powerchip Technology Corp. and ProMOS Technologies all plunged by the daily maximum of 7 percent, while Chimei Innolux shed 6.99 percent, AU Optronics lost 6.71 percent, Taiwan Semiconductor Manufacturing Co fell 1.33 percent and United Microelectronics Corp dropped 4.74 percent.
With the U.S. markets closed on Monday for Labor Day, the only lead comes from the European bourses - which tumbled as banks retreated after German Chancellor Angela Merkel's party lost a regional election, raising concerns about plans to help Greece through its sovereign debt crisis. Also, U.S. housing authorities said they were suing 17 lenders including Deutsche Bank, Credit Agricole, Societe Generale, Barclays and Royal Bank of Scotland.
Also, Deutsche Bank AG Chief Executive Josef Ackermann said on Monday that many European banks would not survive having to revalue sovereign debt held on the banking book at market levels, but rejected proposals for a forced recapitalization of the sector. Ackermann also said that the continuing sovereign debt crisis in the Eurozone would limit bank profits for a number of years.
On the corporate front, chipmaker Infineon technologies fell 6.9 percent, steel giant ThyssenKrupp lost 6 percent and insurer Allianz shed 5.8 percent. Siemens fell 5.2 percent. HSBC cut its price target on Siemens to 85 euros from 115 euros. HSBC cut its price target on Adidas to 62 euros from 65 euros. The shares are fell 3.2 percent.
Swiss specialty chemicals firm Clariant cut its full-year profit and sales forecasts. Clariant shares plunged 16 percent in Zurich. Societe Generale was declining 8.4 percent in Paris. Schneider Electric dropped percent. HSBC cut its price target on the stock to "Neutral" from "Overweight." Among miners in the U.K, Anglo American, Antofagasta, and BHP Billiton were all significantly lower. Citigroup cut its price targets on all the three stocks, while reducing its rating on Antofagasta to "Sell" from "Hold."
The Euro Stoxx 50 index of Eurozone blue chip stocks unofficially lost 4.9 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, fell 3.97 percent. The German DAX declined 5.12 percent and the French CAC 40 lost 4.73 percent. UK's FTSE 100 dropped 3.24 percent, while Switzerland's SMI shed 4.04 percent.
In economic news, Taiwan's inflation rate was 1.34 percent in August from 1.33 percent in July, the Director General of Budget Accounting and Statistics said on Monday. Economists were expecting an inflation rate of 1.45 percent. Food prices rose 1.6 percent annually during the month, while costs of transportation and communication moved up 1.36 percent. Clothing prices rose 3.21 percent.
On a monthly basis, consumer prices advanced 0.03 percent, mainly due to an increase in prices of fruits and vegetables. In the January-August period, the index advanced 1.43 percent compared to the same period last year. The core consumer price index, which excludes some food articles and energy, advanced 1.26 percent from last year. On a monthly basis, the core index decreased 0.22 percent.
At the same time, Taiwan's wholesale price index grew 3.85 percent annually in August, while on a monthly basis, the index increased 0.2 percent. Economists had forecast a 3.8 percent annual increase in wholesale prices.
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