Taiwan Market May Add To Gains

(RTTNews) - The Taiwan stock market has finished higher in two of the last three sessions, and now investors are looking for additional upside movement from the Taiwan Stock Exchange when it kicks off trade on Thursday - possibly cracking the 7,400-point barrier. In all, the index has added more than 9 percent in the last week.

The Asian bourses can look to another modestly positive forecast after the price of crude oil retreated again, easing the inflationary pressures. Some modest earnings reports out of the United States add further positive sentiment, although the upside may be limited by subdued economic data from the world's largest economy. Still, Wall Street finished to the upside, and the Asian markets are likely to follow suit.

The TSE finished sharply higher on Wednesday, near the market's daily high on strength from the heavily weighted financial and electronics sectors. Textiles stocks also were higher, as were tourism, paper, airlines, construction, transport, plastics and cement stocks.

For the day, the index gained 244.18 points or 3.46 percent to close at 7,309.83 after trading between 7,177.73 and 7,330.83 on turnover of 133.38 billion Taiwan dollars. There were 1,986 gainers and 286 decliners, with 325 stocks remaining unchanged.

Among the gainers, Shin Kong Financial, China Airlines and EVA Air were all limit-up 7 percent, while Cathay Financial gained 4.10 percent, AU Optronics added 3.48 percent, Chi Mei Optoelectronics gained 3.68 percent, Nanya Technology gained 2.23 percent, UMC was up 1.32 percent and Chunghwa Telecom was up 0.94 percent.

Wall Street offers a cautiously optimistic lead as stocks ended Wednesday's session with moderate gains after oil fell for a second day. Nonetheless, a slew of mixed corporate data kept buying interest muted.

Investors seemed encouraged that oil remained lower during the day as traders generally ignored another decline in weekly inventories. Light sweet crude for September delivery closed at $124.44 a barrel, down $3.98 for the session. The recent drop in oil prices has been a relief for the markets after they had been pressured for the past months as oil hit record highs. Investors were also looking at a slew of corporate results, including from AT&T (T | Quote | Chart | News | PowerRating), McDonald's (MCD | Quote | Chart | News | PowerRating) and Pfizer (PFE | Quote | Chart | News | PowerRating).

Economic activity has slowed somewhat over the past month, according to the Federal Reserve's Beige Book, a compilation of anecdotal evidence on economic conditions from each of the 12 Federal Reserve districts. The report said that consumer spending was sluggish or slowing in nearly all of the Fed districts, although it noted that the tax rebate checks issued as part of the government's economic stimulus plan boosted sales for some items, especially electronics.

The Beige Book, generally released about two weeks before the next Federal Open Market Committee meeting, is closely watched for indications of the committee's upcoming decision on interest rates. After halting its string of interest rate cuts at its June meeting, the committee's upcoming meeting on August 5th is likely to attract a lot of attention. Analysts currently seem mixed over whether the FOMC will raise interest rates or leave them unchanged at 2 percent.

The major averages traded in a range for most of the afternoon, ending the day with modest gains. The Dow closed up 29.88 points or 0.3 percent at 11,632.38, the Nasdaq closed up 21.92 points or 1 percent at 2,325.88 and the S&P 500 closed up 5.18 points or 0.4 percent at 1,282.18.

In economic news, the Taiwan Industrial Production Index rose at a slower pace of 5.12 percent year-on-year in June compared with the 5.33% recorded in May, the Ministry of Economic Affairs said on Wednesday. Economists were looking for an increase of 5.7 percent for June.

Also, Taiwanese export orders in U.S. dollar terms rose 9.27 percent year-on-year in June, the Ministry of Economic Affairs said on Wednesday, significantly smaller than the 14.46 percent increase in May. Export orders totaled $31.36 billion in June. In May, export orders had amounted to $31.51 billion. Month-on-month, export orders dipped 0.48 percent in June. During the January to June period, export orders grew 14.34 percent year-on-year.

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