Taiwan Market Poised For Rebound

Tue. July 22, 2008; Posted: 08:19 PM

(RTTNews) - The Taiwan stock market has finished lower in two of the last three sessions, but the Taiwan Stock Exchange got a good bounce of support at 7,000 points - and now analysts are expecting the market to extend that rebound and trade back to the upside when the market opens for business on Wednesday.

The forecast for the Asian markets is upbeat after the price of crude oil retreated in the overnight session, while several U.S. companies - including some among the beleaguered financial sector - provided better than expected earnings reports. Those two factors sparked a late buying spree on Wall Street, forcing the U.S. markets sharply higher - and now analysts expect the Asian bourses to generally respond with similar positive sentiment.

The TSE finished modestly higher on Tuesday, closing near the daily high, thanks to bargain hunting among stocks that had eased to more attractive levels. Financial and cement stocks were higher for the session, but the gains were capped by weakness among the transport, electronics and textile stocks.

For the day, the index lost 20.02 points or 0.28 percent to close at 7,065.65 after trading between 6,998.13 and 7,098.68 on turnover of 88.52 billion Taiwan dollars. There were 1,017 gainers and 1,017 decliners, with 471 stocks remaining unchanged.

Among the gainers, Taiwan Cement rallied 5.99 percent, while Asia Cement soared 4.56 percent, Taiwan Cooperative Bank surged 2.96 percent, Chinatrust Financial gained 1.03 percent, MediaTek rose 0.45 percent and Formosa Plastics added 0.91 percent.

Finishing lower, Taiwan Semiconductor Manufacturing Co shed 3.18 percent, while United Microelectronics (UMC | Quote | Chart | News | PowerRating) lost 2.21 percent, Hon Hai Precision dropped 1.3 percent, AU Optronics fell 1.4 percent, China Airlines dropped 1.90 percent, EVA Airways gave up 1.41 percent and Far Eastern Textile fell 1.4 percent.

Wall Street offers a genuinely positive lead as stocks ended Tuesday's session with substantial gains after considerable weakness earlier in the day. A notable decrease by the price of oil along with strength in the financial sector contributed to an afternoon rally.

The markets reacted positively as the price of oil reversed its gain from the previous session, ending the day down $3.09 at $127.95 a barrel. The weakness in the commodity came amid easing concerns about supplies from the Gulf of Mexico. While Tropical Storm Dolly is expected to strengthen to a hurricane on Wednesday, the storm is seen as unlikely to hit the major oil and natural gas refineries in the Gulf of Mexico.

With earnings season in full swing, investors also looked over a deluge of mixed corporate results. The financial sector once again got a boost even though Wachovia (WB | Quote | Chart | News | PowerRating) reported disappointing quarterly results. Investors seemed encouraged that the company has no plans to raise additional capital. The positive momentum followed last week's big rally after Citigroup (C), JP Morgan Chase (JPM | Quote | Chart | News | PowerRating) and Wells Fargo (WFC | Quote | Chart | News | PowerRating) saw better than expected quarterly results.

Positive earnings from DuPont (DD | Quote | Chart | News | PowerRating) and Caterpillar (CAT | Quote | Chart | News | PowerRating) prompted investors to buy up stocks as well. Caterpillar saw its second quarter earnings jump 34 percent due to stronger international sales. Likewise, DuPont also saw a rise in its second quarter profit. The chemical maker said agriculture sales and emerging markets contributed to the profit growth.

The major averages ended the day at or near their best levels of the day. The Dow closed up 135.16 points or 1.2 percent at 11,602.50, the Nasdaq closed up 24.43 points or 1.1 percent at 2,303.96 and the S&P 500 closed up 17.00 points or 1.4 percent at 1,277.00

In economic news, Taiwan will provide June data for export orders and industrial output on Wednesday afternoon. Export orders are seen to increase between 12.75 and 13.45 percent following a 14.46 percent annual expansion in May. Industrial output is forecast higher by between 5.7 and 6.1 percent on year, up from the 5.33 percent annual expansion a month earlier.

Also, Taiwan's jobless rate increased to 3.95 percent in June from 3.84 percent in May, the Directorate-General of Budget, Accounting and Statistics reported Tuesday. A year ago, the rate of unemployment was 3.96 percent. The jobless rate for men stood at 4.12 percent and that for women was 3.73 percent in June.

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