The Taiwan stock market on Thursday emphatically snapped the three-day losing streak that saw the market give up more than 530 points or 7.37 percent while pushing it to a fresh 21-month low. Now investors are hopeful that the Taiwan Stock Exchange will continue to rebound and add to those gains when the market opens for business on Friday.
The forecast for the Asian markets is positive for the second straight day, following another day of quarterly results from the financial sector that exceeded analyst expectations. On a global basis, the financials are expected to trade higher after being battered for weeks. Also, the price of crude oil retreated sharply for the third straight day, marking the largest three-day decline ever. Finally, the United States offered a few bits of modestly optimistic economic data, boosting the markets.
The TSE finished sharply higher on Thursday, boosted by strength from the financial and electronics stocks. Also up were the plastics, textiles, transport, cement and food sectors - although the tourism sector underperformed.
For the day, the index soared 263.87 points or 3.93 percent to close at 6,974.51 after trading between 6,859.97 and 6,976.96 on turnover of 106.3 billion Taiwan dollars. There were 1,806 gainers and 391 decliners, with 350 stocks remaining unchanged.
Among the gainers, TSMC, Cathay Financial and Shin Kong Financial all finished limit-up 7 percent, while UMC added 3.99 percent, Asia Cement was up 4.13 percent, Uni-President was 2.55 percent higher, Pou Chen rose 2.50 percent, EVA Air was up 5.45 percent and China Airlines gained 5.21 percent. Bucking the trend, Formosa International Hotels fell 4.76 percent.
Wall Street offers a sharply positive lead for the second consecutive day as stocks ended Thursday's session with another standout performance, helped by a sharp drop in oil prices and positive quarterly results. Before the markets opened, several big name companies reported quarterly results, including JP Morgan Chase (JPM) and United Technologies (UTX), which were better than analysts were expecting.
The markets saw additional buying interest in the afternoon after oil plunged for the third straight session and closed below $130 a barrel for the first time in six weeks. Prices have dropped more than $15 over the last three days amid continuing demand concerns. Investors are encouraged by the sharp drop in oil, as rising energy prices have contributed to weakness in the economy, forcing consumers to pare back discretionary spending in order to buy necessities like food and gas.
On the economic front, housing starts and building permits unexpectedly soared in June -- data that was quickly dismissed having been skewed by a change in the building code in New York City. Meanwhile, the number of people filing first-time unemployment claims advanced last week, although the actual advance for the week was less than economists had predicted. Also, the Philly Fed survey fell for an eighth straight month in July, coming in slightly worse than expected at -16.3 following a reading of -17.1 in June. Economists expected the Philly Fed survey to come in at -15.
The major averages ended the day just off of their intraday highs. The Dow closed up 207.38 points or 1.9 percent at 11,446.66, the Nasdaq closed up 27.45 points or 1.2 percent at 2,312.30 and the S&P 500 closed up 14.95 points or 1.2 percent at 1,260.31.
In economic news, the cabinet will abolish limits on investment in China by companies whose operational headquarters are on the island, the government said on Thursday, and then raise the mainland investment ceiling for other companies to 60 percent of net worth from 20 to 40 percent previously. Official data show 577 companies qualify under the new measures, which go into effect on August 1.
Also, the Hong Kong Monetary Authority has granted a banking license to Industrial Bank of Taiwan Co., Ltd, effective July 16, the HKMA said on Thursday. IBT is the 16th largest bank in Taiwan, and it increases the number of licensed banks in the Hong Kong Special Administrative Region to 145, the Monetary Authority said.
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