Tue, Aug 01, 2006 - Page 11 News List

TAIEX closes lower on worries about US economy

AFP , TAIPEI

Share prices closed 0.39 percent lower yesterday, reversing early gains led by Wall Street's rally on Friday as local investors focused on the possibility the US economy, a key market, could slow sharply, dealers said.

They said news that second quarter US economic growth fell to 2.5 percent from 5.6 percent in the first raised concerns about possibly weaker US demand, an unwelcome prospect for Taiwan.

Wall Street rallied last Friday on the data because US investors judged that it made further US rate hikes much less likely but this view could only drive initial knee-jerk gains here, a pattern seen in other Asian markets.

The weighted index fell 25.49 points at 6,454.58, off a high of 6,531.11 and a low of 6,428.26, on turnover of NT$72.63 billion (US$2.21 billion).

"There was a growing reluctance among investors to push the upside too far beyond 6,500 points," said Oliver Fang, a Yuanta Core Pacific Securities (元大京華證券) assistant vice president who serves mainly foreign investors.

In particular, foreign investors remained cautious about the earnings outlook for local technology bellwethers in the remainder of the year, he said.

This was understandable, given that companies such as Advanced Semiconductor Engineering Inc (日月光) and United Miroelectronics Corp (UMC, 聯電) are about to report their second-quarter earnings and provide guidance later this week, he added.

Taiwan Semiconductor Manufacturing Co (台積電) closed up NT$0.40 at NT$54.80 and UMC up NT$0.05 at NT$18.

Hon Hai Precision Industry Co (鴻海精密) was up NT$2 at NT$194.

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