Most Asian markets bounced back yesterday on hopes that a US$700 billion bailout for the US financial system will soon win legislative approval, although doubts persisted about the outlook for the global economy.
The TAIEX index rose 44.73 points, or 0.78 percent, to 5,764.01 following a Wall Street rebound. On Tuesday, the benchmark index dropped 3.55 percent on disappointment that the US House of Representatives had rejected the bank rescue package.
The market opened high, but “investors were reluctant to push the prices higher,” said Young Wang of Yuanta Securities Investment Consulting (元大投顧). “Investors were still waiting for the final result of the US bailout package,” he said.
Anthony Huang of Taiwan Securities (台証證券) said investors remain uncertain about the package. And even if the bailout passes doubts remain about the future of Asian economies.
“Taiwan can’t be doing well if consumers in US and Europe are not spending enough.” Huang said.
Looking ahead, analysts said they expected the domestic market would not suffer further steep falls after the Taiwanese government adopted measures to stabilize prices, including a ban on short-selling for two weeks from yesterday.
Japan’s Nikkei 225 index gained 108.40 points, or 0.96 percent, to close at 11,368.26. Markets in India and Australia also gained. But South Korea’s Kospi lost its earlier gains and fell 0.6 percent to 1,439.67.
Regional reaction was muted because several markets were closed for holidays, including those in Hong Kong, China, Singapore, Indonesia, Malaysia and the Philippines.
In early European trading, markets were mixed. Britain’s FTSE 100 was up 1.4 percent, but Germany’s DAX was down 0.1 percent.
Investors took heart from the rebound on Wall Street on Tuesday amid expectations that lawmakers will salvage the rescue plan aimed at cleaning up the bad debt mess at banks and other financial institutions. The US Senate will vote today on a revised bailout plan, with a House revote expected later in the week. In New York, the Dow Jones industrial average surged nearly 500 points after plunging 777 points on Monday.
But analysts warned that new worries were already starting to emerge about possible compromises that might be included in a reworked emergency package, raising questions about how effective it may be when implemented.
“The market is already expecting the plan to pass. The question now is what’s next,” said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Securities Co in Tokyo.
Investors are still concerned about declining US housing prices and the overall US economy — a vital export market for Asia — especially as they look ahead to the Christmas shopping season.
Major Japanese companies, including electronics and autos, are counting on solid exports to the US to keep up profits, Fujito said.
ADDITIONAL REPORTING BY AFP
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
The New Taiwan dollar and Taiwanese stocks surged on signs that trade tensions between the world’s top two economies might start easing and as US tech earnings boosted the outlook of the nation’s semiconductor exports. The NT dollar strengthened as much as 3.8 percent versus the US dollar to 30.815, the biggest intraday gain since January 2011, closing at NT$31.064. The benchmark TAIEX jumped 2.73 percent to outperform the region’s equity gauges. Outlook for global trade improved after China said it is assessing possible trade talks with the US, providing a boost for the nation’s currency and shares. As the NT dollar
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