The Taiwan stock market headed right back up into positive territory again on Tuesday, one session after it had halted the six-day winning streak in which it had surged more than 370 points or 5.2 percent. The Taiwan Stock Exchange finished just above the 7,620-point plateau, and now traders are bracing for renewed selling pressure when the market kicks off trade on Wednesday.
The global forecast for the Asian markets is broadly negative following renewed concerns over the Greek debt crisis. Financials figure to plummet, along with oil, property, steel and technology shares. The European and U.S. markets finished sharply lower on Tuesday, and the Asian bourses are predicted to open in similar fashion.
The TSE finished modestly higher on Tuesday as gains from the paper, textile, technology and construction stocks were pared by losses among the cement, finance and plastic sectors.
For the day, the index added 34.32 points or 0.45 percent to finish at 7,622.01 after trading between 7,505.96 and 7,656.26 on turnover of 97.29 billion Taiwan dollars.
Among the gainers, Hon Hai jumped 4.32 percent.
The lead from Wall Street continues to be weak as stocks continued to see substantial weakness on Tuesday after opening sharply lower. Renewed concerns about the financial situation in Europe helped to pull the markets down further from last week's highs.
The sell-off followed news that Greek Prime Minister George Papandreou planned to put the Greek bailout package up for a referendum, potentially derailing the agreement reached by European leaders last week. Fitch Ratings noted that the announcement by Papandreou dramatically raises the stakes for Greece and the euro zone as a whole.
Stocks saw continued weakness when the Institute for Supply Management reported a slowdown in manufacturing growth in October. The ISM said its manufacturing index dropped to 50.8 in October from 51.6 in September, with a reading above 50 indicating growth in the sector. The drop surprised economists, who had expected the index to edge up to a reading of 52.0.
Profit taking also contributed to the weakness among stocks, with traders showing some risk aversion ahead of the outcome of the Federal Reserve's monetary policy meeting and Friday's monthly employment report.
Meanwhile, shares of Pfizer (PFE) closed higher after the drug giant reported much stronger than expected third quarter adjusted earnings growth. The company also raised its full year earnings and revenue guidance.
The major averages closed firmly in negative territory, not far off their worst levels of the day. The Dow plunged 297.05 points or 2.5 percent to 11,657.96, the NASDAQ tumbled 77.45 points or 2.9 percent to 2,606.96 and the S&P 500 plummeted 35.02 points or 2.8 percent to 1,218.28.
On the economic front, Taiwan's manufacturing sector contracted again in October, reflecting worsening in business conditions that was the sharpest since January 2009, Markit Economics said on Tuesday. The HSBC Purchasing Managers' Index for manufacturing fell to 43.7 from 44.5 in September. A reading below 50 indicates contraction in the sector. New business received by manufacturers fell due to a reduction in demand from domestic and foreign markets.
For comments and feedback: editorial@rttnews.com