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Local bourse pulls back on renewed concerns over economy

2012/05/03 15:26:08

Taipei, May 3 (CNA) Renewed concerns over the global economy prevented the local bourse from making further gains and sent the index into negative territory at the end of the session Thursday, after the United States and Europe reported disappointing job data overnight, dealers said.

After a 2.33 percent jump Wednesday, the market encountered some profit taking pressure due to stiff technical resistance ahead of the 7,700 point level, dealers said.

However, certain high-tech heavyweights, such as Taiwan Semiconductor Manufacturing Co. (TSMC) and Hon Hai Precision Industry Co., remained resilient throughout the session, lending some support to the broader market, dealers said.

The weighted index closed down 17.28 points, or 0.22 percent, at 7,659.53, after moving between 7,643.09 and 7,681.23. Turnover during the session totaled NT$83.25 billion (US$2.85 billion).

The market opened down 0.12 percent on a lackluster Wall Street performance overnight after lower-than-expected job growth data was reported in the U.S. private sector for April, dealers said.

Market sentiment was further dampened by the report of a record high unemployment rate of 10.9 percent in the eurozone for March, keeping the index fluctuating below Wednesday's closing level, dealers said.

"Worries over the global economic fundamentals returned to affect the equity market," Concord Securities analyst Kerry Huang said. "After yesterday's significant advance, it was no surprise that investors tended to find a reason to take profit."

"In particular, as the index moved closer to the technical resistance range between 7,700 points and 7,800 points, the market pulled back," he said.

Huang said the downward pressure was seen almost across the board soon after the local bourse opened.

"But, the selling was not intolerable at all as certain large cap electronics still attracted buying, which prevented the broader market from falling further," Huang said.

Among the winning stocks, TSMC, the world's largest contract chip maker, closed up 0.57 percent at NT$88.90, while Hon Hai, the world's largest contract electronics supplier, ended up 0.45 percent at NT$90.00.

"It seems that some investors were willing to hold stocks as long-term investments," Huang said.

However, he said, unless turnover expands to NT$100 billion or more, the market is unlikely to clear the technical hurdles any time soon.

At the end of the session, foodstuff stocks suffered the heaviest losses among the eight largest sectors of the market, finishing down 0.9 percent.

Financial and construction stocks fell 0.7 percent, paper and pulp shares lost 0.6 percent, and plastics and chemicals closed down 0.4 percent.

The cement, and machinery and electronics sectors fell 0.1 percent, and textiles ended unchanged.

(By Frances Huang)