The Taiwan stock market has finished lower now in two of the last four sessions following the five-day losing streak that cost it more than 738.83 points or 10.5 percent while setting a fresh two-year low in the process. Now analysts say that the Taiwan Stock Exchange could begin a modest recovery on Friday, following the rest of the region to the upside.
The Asian markets earn a generally optimistic global forecast, spurred by another decline in the price of crude oil that will please the importers and confound the commodity-driven issues. Mixed news about the U.S. financial sector was enough to stabilize the heavy selling that had wracked those stocks in recent days. Lukewarm economic data also helped to ease investors' fears. Finally, many of the Asian bourses are mired in deep losing streaks and starting from multi-year lows, which may be enough to spur a mild recovery on bargain hunting.
The TSE finished sharply lower on Thursday as investors shrugged off a government stimulus package as ineffective. Cement stocks fell sharply during the session, as did the financials, while the tourism, construction, textile and electronics sectors also posted significant losses.
For the day, the index dropped 206.06 points or 3.19 percent to close at 6,251.95 after trading between 6,249.52 and 6,438.49 on turnover of 85.46 billion Taiwan dollars. There were 1,737 decliners and 225 gainers, with 301 stocks finishing unchanged.
Among the decliners, Taiwan Cement and Yuanta Financial were limit-down 7 percent, while Cathay Financial closed down 3.37 percent, Polaris Securities gave up 3.58 percent, Hon Hai Precision Industry lost 1.71 percent, Taiwan Semiconductor Manufacturing Co (TSMC) fell 2.61 percent, United Microelectronics (UMC) tumbled 6.12 percent, Formosa International Hotels plunged 5.94 percent, Cathay Real Estate shed 5.93 percent, Far Eastern Textile gave up 6.43 percent and Formosa Plastics lost 2.29 percent.
Wall Street provides a positive lead as stocks ended Thursday's session with notable gains following a drop in oil prices that prompted investors to go bargain hunting. Continued fears over the health of Lehman Brothers (LEH) contributed to earlier weakness, although rumors about an acquisition fueled a late day rally.
Lehman Brothers contributed to the early weakness, a day after the investment bank released its preliminary third quarter results as well as a series of initiates to help bolster its balance sheet. Investors and analysts alike seemed unimpressed with the moves, with analysts at Goldman Sachs and Citigroup downgrading the stock as a result. Nonetheless, rumors about a possible acquisition sent the stock markets into rally mode.
Adding to the afternoon buying interest, oil plunged again on Thursday and threatened to cross below the key $100 a barrel mark. Light sweet crude for October delivery closed at $100.87 a barrel, down $1.71 on the session. Prices dipped as low as $100.10 a barrel in morning trading. Traders kept a close eye on Hurricane Ike, which roared towards Texas and could increase to a Category 3 or even a Category 4 storm over the next day or two. However, forecasters expect Ike to spare the major oil areas in the Gulf of Mexico.
The Department of Labor released its report on weekly jobless claims in the week ended September 6, showing that jobless claims decreased compared to the revised reading for the previous week but came in above economist estimates. Jobless claims fell to 445,000 from the previous week's revised figure of 451,000. Economists had expected claims to fall to 440,000 from the 444,000 originally reported for the previous week. Also, the four-week moving average rose to 440,000 from the previous week's revised average of 439,750.
The major averages saw added buying interest in the final 30 minutes of the session, with the Nasdaq closing at its intraday high. The Dow closed up 164.79 points or 1.5 percent at 11,433.71, the Nasdaq closed up 29.52 points or 1.3 percent at 2,258.22 and the S&P 500 closed up 17.01 points or 1.4 percent at 1,249.05.
In economic news, the government on Thursday announced an economic stimulus package worth $5.6 billion as the stock market struggles. The initiative, worth 180 billion Taiwan dollars, would help the island achieve the government's target of 4.3 percent economic growth this year and shore up the ailing stock market, officials said. The stimulus measures also include other tax breaks, financial incentives for businesses and steps to boost investment and expand exports.
Also, HD LCD TV prices and increasing product availability are helping to increase the penetration rate of large-size televisions in Taiwan, the DigiTimes said on Thursday. According to market sources, the penetration rate of full HD TVs in Taiwan in January to July increased 10 percent on year. Estimates also expect that the penetration rate may increase to 35 to 40 percent by year's end, with ongoing promotions and further price drops planned for the second half of the year.
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