Local shares on Friday closed little changed after moving in a narrow range as investors turned cautious ahead of the release of US nonfarm payroll data later in the day, dealers said.
The caution, reflected in the day’s thin turnover, was also the result of a lack of leads from Wall Street, which was closed on Thursday for the US’ Independence Day holiday, dealers said.
While large-cap tech stocks generally remained sluggish, select old economy and financial stocks attracted buying as safe havens to lend support to the broader market, they said.
The TAIEX on Friday ended up 9.83 points, or 0.09 percent, at 10,785.73, after moving between 10,756.67 and 10,812.38, on turnover of NT$84.89 billion (US$2.73 billion). That was an increase of 0.5 percent from a close of 10,730.83 a week earlier.
The market opened up 9.95 points on follow-through buying from a session earlier, when the weighted index closed up 0.3 percent, and soon fell into a narrow trading range for the rest of the session as the electronics sector remained in consolidation mode, dealers said.
Late in the session, buying emerged in certain tech stocks, such as contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), as well as old economy and financial stocks, helping the broader market recoup earlier losses and close in positive territory, they said.
“Look at today’s thin turnover. We had a quiet day as many investors preferred to stay on the sidelines, waiting for the US jobs data due later in the day,” Hua Nan Securities Investment Management Co (華南投顧) analyst Kevin Su (蘇俊宏) said.
“As trade tensions between the United States and China have been eased to some extent, the market is looking for clues into whether and when the [US Federal Reserve] will start cutting rates,” Su said.
The Fed’s next policymaking meeting is scheduled for late this month.
In addition, due to the US holiday, many foreign institutional investors tended to step back from the trading floor, which also curtailed trading volume, Su said.
Market heavyweights, especially in the tech sector, remained sluggish throughout the session, due to low turnover, he said.
“TSMC moved lower today, but its losses were partly pared by late trading session buying, helping the broader market become resilient and end above the previous closing level,” Su said.
TSMC, the most heavily weighted stock on the local market, fell 0.41 percent to close at NT$243, off an early low of NT$241.50, with 22.85 million shares changing hands.
Also in the electronics sector, which rose 0.1 percent, Largan Precision Co (大立光), a supplier of smartphone camera lenses to Apple Inc, lost 0.13 percent to end at NT$3,950, off a low of NT$3,940.
Hon Hai Precision Industry Co (鴻海精密), an assembler of Apple’s iPhones, rose 0.64 percent to close at NT$78.20.
“Thanks to the bargain hunting, non-tech stocks generally outperformed the electronics sector, stabilizing the broader market,” Su said. “With the market awash in liquidity, investors decided to park their funds in these stocks for the time being.”
Among the gaining old economy stocks, Wei Chuan Foods Corp (味全食品) rose 0.76 percent to close at NT$33.05 and rival Uni-President Enterprises Corp (統一企業) added 0.61 percent to end at NT$82 amid optimism over the peak summer season.
Asia Cement Corp (亞洲水泥) also gained 1.79 percent to close at NT$48.45.
In the financial sector, which rose 0.26 percent, Shanghai Commercial & Savings Bank (上海商業儲蓄銀行) rose 1.41 percent to end at NT$57.40, CTBC Financial Holding Co (中信金控) rose 0.7 percent to close at NT$21.70 and Mega Financial Holding Co (兆豐金控) added 0.64 percent to end at NT$31.40.
“Investors should pay close attention to June sales figures, as all listed companies are required to release their reports by July 10. They should also follow earnings season starting next week to get a clearer picture of companies’ fundamentals,” Su said.
Foreign institutional investors on Friday bought a net NT$209.81 million in shares, Taiwan Stock Exchange data showed.
Elsewhere in Asia on Friday, markets fluctuated as investors steeled themselves for the release of the US jobs report, which could have a major bearing on the size of an expected Fed interest rate cut.
With uncertainty over the US-China trade row put aside for now, this week has been dominated by speculation about the US central bank’s plans to address a weakening economic outlook, both at home and globally.
The jobs report is a closely watched gauge of the state of the world’s biggest economy and a below-forecast reading would ramp up hopes that the Fed will announce a 50 basis point reduction.
“Today’s US payrolls report has the potential to upset the apple cart when it comes to whether or not we can expect to see a Fed rate cut later this month, and if we do, whether it will be 25 or 50 basis points,” CMC Markets UK chief market analyst Michael Hewson said.
Pepperstone Group Ltd head of research Chris Weston added that “a number in line with consensus probably delivers that July cut and I think that’s what the market wants to see.”
“If we get a really strong number, I think risk could really come off the table,” he told Bloomberg News.
The clamor for a Fed rate cut comes as central banks worldwide take a more accommodative position to offset economic weakness blamed on trade uncertainty, particularly the China-US standoff.
Equities swung back and forth ahead of the jobs release, with most markets bouncing back from morning losses.
Tokyo’s Nikkei 225 on Friday closed up 43.93 points, or 0.2 percent, at 21,746.38, jumping 2.2 percent from a close of 21,275.92 on June 28.
The Shanghai Composite on Friday rose 5.81 points, or 0.2 percent, to 3,011.06, an increase of 1.1 percent from 2,978.88 a week earlier.
Seoul’s KOSPI on Friday gained 1.86 points, or 0.1 percent, to close at 2,110.59, but fell 0.9 percent from a close of 2,130.62 on June 28.
Sydney, Wellington, Manila and Bangkok were also in positive territory.
Hong Kong’s Hang Seng on Friday slid 20.94 points, or 0.1 percent, to 28,774.83, but managed to gain 0.8 percent from 28,542.62 a week earlier.
Singapore, Mumbai and Jakarta also edged down.
“If there is one thing financial markets hate, it’s a delicate balance between risk-on and off, suggesting something will give shortly,” Vanguard Markets analyst Stephen Innes said.
“Over the short run, risk-on sentiment should prevail on the back of the deluge on central banks easing. The Fed is critical to the risk-on fever,” he said, adding that “now is the time to shift easing policy into high gear.”
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