Taiwan Market Draws Mixed Lead

(RTTNews) - The Taiwan stock market has finished lower now in six of the last seven sessions, falling more than 600 points or 12 percent and plunging the index to a five-year closing low in the process. The Taiwan Stock Exchange gave up support at 5,000 points on Friday, and now investors are bracing for another day of volatile trade that could see the index reclaim that mark on Monday.

The global forecast for the Asian markets continues to be permeated with pessimism as fears of a global recession continue to mount, likely resulting in continued market volatility. Many of the markets have suffered heavy losses in recent sessions, making them ripe for bargain hunters. More weak economic data out of the United States added to the negativity, although it was tempered by some unexpectedly strong corporate earnings. But it all added up to drag the U.S. stocks into the red on Friday, setting up a negative lead for the Asian bourses on Monday.

The TSE finished sharply lower again on Friday, dragged to the downside again by weakness among the financial sector. The technology sector also suffered heavy losses, while the steel, petrochemical and transportation stocks also were lower. For the week, the market lost 170.31 points or 3.32 percent, while Friday marked the lowest close since the index hit 4,872.15 on June 30, 2003.

For the day, the index lost 115.57 points or 2.28 percent to close at 4,960.40 after trading between 4,924.73 and 5,024.43 on turnover over 55.33 billion Taiwan dollars. There were 1,079 decliners and 365 gainers, with 401 stocks finishing unchanged.

Among the decliners, Cathay Financial, Taiwan Semiconductor Manufacturing Co (TSMC | Quote | Chart | News | PowerRating) and United Microelectronics (UMC | Quote | Chart | News | PowerRating) all were limit-down, and AU Optronics fell 3.25 percent. Bucking the trend, China Airlines rallied 5.52 percent, EVA Airways jumped 3.51 percent and Nan Ya Plastics rebounded 0.24 percent.

The market earns a modestly negative lead from Wall Street as stocks saw another volatile trading session on Friday while traders weighed some weaker than expected economic data against better than expected corporate earnings. With traders reacting negatively to a report from the Commerce Department showing a steep drop in housing starts in the month of September, stocks initially showed a steep downward move. The Dow was down more than 260 points at its low.

The Commerce Department report showed that housing starts fell 6.3 percent to an annual rate of 817,000 in September from the revised August rate of 872,000. Economists had expected starts to fall to 870,000 from the 895,000 originally reported for the previous month. With the monthly decrease, housing starts fell to their lowest level since January of 1991. Starts in September were down 31.1 percent compared to the same month last year.

Also, Reuters and the University of Michigan released the preliminary results of their survey of consumers for the month of October, showing that the consumer sentiment index fell to 57.5 in October from a reading of 70.3 in September. The decrease marked the biggest monthly drop on record and dragged the index down to its lowest level since June.

Stocks were unable to sustain the initial downward move, however, with positive earnings news from companies such as IBM (IBM | Quote | Chart | News | PowerRating), Google (GOOG | Quote | Chart | News | PowerRating), and Honeywell (HON | Quote | Chart | News | PowerRating) helping to keep selling pressure somewhat subdued. The markets subsequently staged a substantial turnaround over the course of the trading day, with strength among resource stocks contributing to the turnaround. At its high for the session, the Dow was up more than 300 points.

The major averages moved back to the downside going into the close. The Dow closed down 127.04 points or 1.4 percent at 8,852.22, the Nasdaq closed down 6.42 points or 0.4 percent at 1,711.29 and the S&P 500 closed down 5.88 points or 0.6 percent at 940.55. Despite the losses for the session, the major averages still all closed higher for the week. The Dow posted a weekly gain of 4.7 percent, while the Nasdaq and the S&P 500 closed up 3.7 percent and 4.6 percent, respectively.

In economic news, Taiwan oil refiners will implement a decrease in gasoline prices by 2 Taiwan dollars and diesel prices by 2.2 Taiwan dollars per liter to reflect international oil prices, the government said over the weekend. Affected stations include Chinese Petroleum Corp (CPC | Quote | Chart | News | PowerRating) and Formosa Petrochemical Corp (FPC | Quote | Chart | News | PowerRating).

In corporate news, China Steel Corp may land for a possible 60 billion Taiwan dollar investment on the island, the company said over the weekend. The mill is in talks with the harbor authorities in Taichung in western Taiwan for leasing land, the company said. Taiwan's annual production of about 25 million metric tons of steel isn't enough to meet local demand, prompting China Steel to expand, the company said. China Steel can produce about 11 million metric tons of crude steel a year.

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