The Taiwan stock market has finished lower now in back-to-back sessions, giving away more than 140 points or 1.9 percent along the way. The Taiwan Stock Exchange finished just above the 8,000-point plateau, although analysts are not sanguine that the market will be able to hold that level when it opens on Tuesday.
The global forecast for the Asian markets suggests continued consolidation as pessimism is likely to persist after China cut its outlook for GDP growth in 2012. Adding to the cautious sentiment is a report from Markit Economics indicating that the Eurozone private sector contracted more than estimated in February. The European and U.S. markets finished lower on Monday and the Asian markets are expected to open in similar fashion.
The TSE finished sharply lower on Monday following heavy damage to the food sector after an outbreak of Avian Flu threatened local poultry farms. Technology stocks also plunged, along with cement, construction, textile, finance and plastics stocks.
For the day, the index plummeted 109.70 points or 1.35 percent to finish at 8,004.74 after trading between 7,998.96 and 8,115.49 on turnover of 107.04 billion Taiwan dollars. There were 3,551 decliners and 956 gainers, with 228 stocks finishing unchanged.
Among the decliners, Ruentex Development plunged by the 7 percent daily limit, while Great Wall Enterprise shed 3.73 percent, Charoen Pokphand Enterprise (Taiwan) plummeted 5.69 percent, Dynapack International Technology fell 1.86 percent, Catcher Technology lost 4.68 percent and Hon Hai Precision Industry eased 0.50 percent.
The lead from Wall Street remains mildly negative as stocks saw further downside on Monday after ending Friday's session modestly lower. Troubling economic news from overseas weighed on the markets, overshadowing another batch of better than expected U.S. economic data.
The weakness followed news that China cut its outlook for GDP growth in 2012, raising concerns about demand in the world's second largest economy. Chinese Premier Wen Jiabao said that the government now expects the economy to expand by 7.5 percent in 2012 compared with its previous estimate for 8 percent growth.
In addition, a report from Markit Economics indicating that the Eurozone private sector contracted more than estimated in February as its final composite output index fell to 49.3 in February from 50.4 in January, coming in below the earlier flash estimate of 49.7. The overall contraction in output reflected a renewed decline in service sector activity.
As a result, traders largely shrugged off a report from the Institute for Supply Management showing its non-manufacturing index rose to 57.3 in February from 56.8 in January, with a reading above 50 indicating growth in the service sector. The increase surprised economists, who had expected a reading of 56.0. With the increase, the index rose to its highest level since 59.0 in February 2011.
A separate report from the Commerce Department showed that new orders for U.S. manufactured goods fell by less than anticipated in January.
The major averages ended the session well off their worst levels of the day but still closed in the red. The Dow edged down 14.76 points or 0.1 percent to finish at 12,962.81, while the NASDAQ fell 25.71 points or 0.9 percent to 2,950.48 and the S&P 500 slid 5.30 points or 0.4 percent to 1,364.33.
In economic news, Taiwan's annual inflation eased more than expected to 0.25 percent in February from 2.37 percent in January, the Director-General of Budget, Accounting and Statistics said on Monday. The expected rate for February was 1.3 percent. Wholesale price inflation also slowed in February to 1.92 percent from 4.38 percent a month ago. The annual rate stays below the consensus forecast of 2.23 percent.
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