Market Commentary and Intraday News

Taiwan Shares May Reverse Monday's Gains

257 days ago

(RTTNews) - The Taiwan stock market has moved higher now in consecutive trading days, rising almost 80 points or 1.1 percent in the process. The Taiwan Stock Exchange closed just above the 7,450-point plateau, and now analysts are forecasting a mild easing at the opening of trade on Tuesday.

The global forecast for the Asian markets is mixed with a hint of weakness after ratings agency Moody's downgraded the outlook for the European Union to negative from stable. A decline in Germany's manufacturing activity also may weigh on investors. The European markets were higher on Monday, while the U.S. bourses were closed for the Labor Day holiday - and the Asian markets are expected to open lower.

The TSE finished modestly higher on Monday as gains from the paper, technology, finance, construction and cement stocks were mitigated by weakness from the food, plastic and textile sectors.

For the day, the index climbed 53.47 points or 0.72 percent to finish at 7,450.53 after trading between 7,389.68 and 7,462.15 on turnover of 74.70 billion Taiwan dollars. There were 2,557 gainers and 1,758 decliners, with 396 stocks finishing unchanged.

Among the gainers, Shihlin Paper surged by the 7 percent daily maximum, while Hon Hai spiked 6.13 percent, Catcher Technology jumped 1.67 percent, TPK Holding climbed 3.10 percent, Largan Precision collected 3.21 percent and Genius Electronic Optical gathered 2.55 percent.

There is no lead from Wall Street, which was closed for the Labor Day holiday, while the news from Europe is mixed - with caution also growing ahead of Friday's all-important nonfarm payroll data from the United States.

Adding to the pessimistic outlook, ratings agency Moody's on Monday downgraded the European Union's outlook to negative from stable, citing a weakened outlook for the region's largest economies and deterioration in credit-worthiness of certain members. The EU's AAA rating was unaffected.

On the economic front, Germany's manufacturing activity declined more than initially estimated for August, final data from Markit Economics showed on Monday. The final Markit/BME Purchasing Managers' Index came in at 44.7 in August, down from the flash reading of 45.1, but rose from 43 in July.

In a separate report, the Eurozone's manufacturing sector continued to contract in August, but a slower pace than in July, survey results confirmed. However, the improvement was slightly weaker than estimated in the flash report. In the U.K., the Markit/Chartered Institute of Purchasing & Supply Purchasing Managers Index rose more than expected to 49.5 from 45.2 in July. Economists had forecast the index to rise to 46.3.

The major European markets were firmly higher on Monday as the DAX in Germany picked up 0.63 percent, while the CAC 40 in France surged 1.19 percent, London's FTSE collected 0.82 percent and the Swiss market added 0.78 percent.

In economic news, Taiwan's manufacturing sector contracted at a steeper pace in August, a report from Markit Economics revealed on Monday. The headline HSBC purchasing managers' index fell to 46.1 in August from 47.5 in July. A PMI reading below 50 indicates expansion of the sector.

Output at manufacturing firms fell for a third successive month in August due to decline in both new orders and new export orders. Production fell at the fastest pace since December 2011.

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