Fri, May 05, 2017 - Page 12 News List

TAIEX edges up as fears of Fed rate hike cap gains

Staff writer, with CNA

Shares closed slightly higher yesterday, as renewed anxiety over a possible interest rate hike by the US Federal Reserve capped the market’s upside, dealers said.

Many investors also stayed on the sidelines amid concern over stiff technical resistance near the 10,000-point mark, which kept turnover low, they said.

The TAIEX ended up 12.31 points, or 0.12 percent, at 9,967.64, after moving between 9,938.96 and 9,973.76, on turnover of NT$74.32 billion (US$2.47 billion).

The market opened 7.4 points higher on follow-through buying from the previous day and rose to the day’s high early in the session before some selling emerged, as the index moved closer to 10,000 points, dealers said.

Amid thin turnover, large-cap stocks in the bellwether electronics sector, such as contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), failed to extend their gains from recent sessions, they said.

“Looking at the quiet session today, it seemed that many investors were concerned that the Fed would raise interest rates soon, which would deter foreign investors from moving funds into the region,” Concord Securities Co (康和證券) analyst Kerry Huang said.

While the Fed on Wednesday decided not to raise its key interest rates, the US central bank forecast faster growth for the US economy after a slow first quarter.

“That statement by the central bank hinted at higher interest rates,” Huang said.

As a result, expectations of a rate hike next month rose from 60 percent to 75 percent, he said, citing Wells Fargo.

Market sentiment was overshadowed by such fears, which prevented the main board from reaching 10,000 points, Huang said.

“With today’s low turnover, it is unlikely that the weighted index will challenge that point of stiff technical resistance,” Huang said. “Unless the trading volume reaches at least NT$100 billion, the market will unlikely be able to stand above 10,000 points.”

In the electronics sector, gains were limited as large-cap stocks stalled. It closed up 0.25 percent.

TSMC, the most heavily weighted stock on the local market, ended unchanged at NT$198, with 22.09 million shares exchanging hands.

Hon Hai Precision Industry Co (鴻海精密), an assembler of iPhones and iPads for Apple Inc, closed flat at NT$100.50, while Largan Precision Co (大立光), a smartphone camera lens supplier to Apple, fell 1 percent to end at NT$4,970, but remained the most expensive stock in the nation.

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