Shares in Taiwan on Friday closed lower, extending losses from a session earlier, as investors took cues from a pullback on Wall Street overnight to keep cutting their holdings, dealers said.
Market sentiment turned cautious amid rising concerns over a possible interest rate hike by the US Federal Reserve in an upcoming policymaking meeting, while many investors were waiting for what Fed Chair Janet Yellen would say in a meeting planned by the Executives Club of Chicago later on Friday, the dealers said.
Selling focused on large-cap stocks almost across the board to push down the weighted index below the 20-day moving average at about 9,685 points at the end of the session, they said.
The weighted index on the Taiwan Stock Exchange on Friday ended down 43.59 points, or 0.45 percent, at 9,648.21, after moving between 9,633.88 and 9,679.82 on turnover of NT$84.01 billion (US$2.71 billion). That compared with a close of 9,750.47 on Feb. 24, a decline of 1.05 percent.
The market on Friday opened down 0.20 percent after the losses on Wall Street, where the Dow Jones Industrial Average closed down 0.53 percent and the S&P 500 index ended 0.59 percent lower on technical correction overnight, the dealers said.
Selling on the local main board continued to keep the index below the previous closing level for the rest of the session, reflecting escalating fears of a rate hike by the Fed, the dealers added.
“The main board has become technically weaker after the weighted index ended below the 20-day moving average,” KGI Securities Co (凱基證券) analyst Phil Chu said. “So it is possible that the weakness will continue until the nearest technical support at around 9,600 points.”
Several Fed officials have voiced the possibility of an immediate rate hike.
Federal Reserve Governor Jerome Powell joined the growing listing of such officials, saying in an interview on Thursday that conditions relating to inflation and employment have come close enough to the Fed’s goal and that the central bank would consider seriously raising rates this month.
“Now the chance for a rate hike in the March Fed meeting has risen to more than 80 percent. Such an interest rate increase specter is expected to keep haunting the global financial markets until the two-day meeting is wrapped up March 15,” Chu said.
“Once the Fed raises interest rates, the US dollar will become stronger, which will lead foreign investors to move funds out of the region. Depleting liquidity is the last thing equity investors want to see,” he said.
“The focus for the day ahead would likely be on Federal Reserve Chair Yellen’s speech in Chicago before next week’s jobs data release for guidance on the Fed’s path,” IG Asia Pte Ltd market strategist Jingyi Pan (潘婧怡) wrote in an e-mail.
Market heavyweights in both the electronics and non-high-tech sectors were highlighted by downward pressure throughout the session, he added.
Among the falling electronics stocks, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the most heavily weighted stock in the local market, lost 1.08 percent on Friday to close at NT$184, with 28.2 million shares changing hands.
Led by TSMC, the electronics sector ended down 0.52 percent.
IC designer MediaTek Inc (聯發科) lost 1.79 percent to close at NT$219.50, while Hon Hai Precision Industry Co (鴻海精密), the world’s largest contract electronics maker, lost 0.89 percent to end at NT$88.80.
In the old-economy sector, China Steel Corp (中鋼), the nation’s largest steelmaker, fell 1.16 percent to close at NT$25.55, Nan Ya Plastics Corp (南亞塑膠) lost 1.53 percent to end at NT$70.90 and Eclat Textile Co (儒鴻) shed 3.37 percent to close at NT$301.50.
“Investors had better watch closely whether foreign institutional investors will continue to cut their long position contracts in futures, which will bode ill for the spot market,” Chu said.
Foreign institutional investors on Friday sold a net NT$4.99 billion worth of shares on the main board, stock exchange data showed.
Other Asian stocks fell as investors in neighboring markets also shunned risk.
The MSCI AC Asia Pacific Index had declined 0.7 percent as of 4:35pm on Friday in Hong Kong, set for its worst week in two months.
Japan’s TOPIX on Friday fell to 995.41, paring a three-day gain, but rose 0.35 percent week-on-week from its close of 991.91 on Feb. 24.
South Korea’s KOSPI underperformed in Asia, closing at 2,078.75 on Friday, as tourism stocks led by Hotel Shilla Co plunged after a report said China would curb tourism to the nation. It closed at 2,094.12 on Feb. 24, a weekly decline of 0.73 percent.
China government’s top advisory body, the Chinese People’s Political Consultative Conference, is to open in Beijing and run alongside the meeting of the Chinese National People’s Congress, which commences today with Chinese Premier Li Keqiang (李克強) delivering proposed key economic targets for the year.
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