Local shares on Friday finished higher after getting a boost from rising hopes that the US Federal Reserve would cut interest rates in the near future, dealers said.
Buying focused on the bellwether electronics sector, led by contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which gave a better-than-expected sales forecast for the third quarter, while old economy and financial stocks appeared mixed, they said.
The TAIEX on Friday ended up 73.91 points, or 0.68 percent, at 10,873.19, after moving between 10,861.99 and 10,919.96, on turnover of NT$122.57 billion (US$3.95 billion). That was a 0.5 percent increase from a close of 10,824.35 on July 12.
The market opened up 0.58 percent as investors rushed to buy large-cap electronics stocks in reaction to a strong recovery overnight on the Dow Jones Industrial Average, which ended up 3.12 points after rebounding from an earlier 151.06-point decline, dealers said.
The Dow bounced back after New York Federal Reserve President John Williams said that the Fed should “act quickly” at a time when the economy was slowing, a clear appeal to lower interest rates.
He pointed to studies suggesting that when there are few stimulus options available, officials should “move more quickly than you otherwise might” rather than waiting “for disaster to unfold.”
TSMC, the most heavily weighted stock in Taiwan, led the early gains and even pushed the weighted index above 10,900 points, before some investors pulled back, limiting the day’s gains, dealers said.
“Since Williams is one of the voting members on the Federal Open Market Committee, his comments have strengthened market hopes that the Fed will lower its key interest rates at the end of this month, say, by 0.5 percentage points,” Hua Nan Securities Co (華南永昌證券) analyst Kevin Su (蘇俊宏) said.
The Fed has scheduled a policymaking meeting for July 30-31.
“Once the Fed lowers interest rates to send the US dollar lower, funds are expected to exit the US market, but enter regional markets, and markets including Taiwan could enjoy ample liquidity,” Su said.
Combined with the rate cut hopes, an upbeat sales forecast for the third quarter given by TSMC a day earlier led investors to pick up large-cap tech stocks, in particular in the semiconductor sector, he said.
TSMC rose 1.97 percent to close at NT$259, with 59.64 million shares changing hands, after the chipmaker said that it could post US$9.1 billion to US$9.2 billion in consolidated sales for the third quarter, which would be up 18 percent from the second quarter.
TSMC’s gains alone contributed to an increase of about 50 points to the TAIEX, and boosted the semiconductor subindex by 1.87 percent and the electronics sector by 1.16 percent.
Buying also spread to other IC stocks, with IC packaging and testing services provider ASE Technology Holding Co (日月光投資控股) up 4.14 percent to close at NT$70.40 and DRAM chipmaker Nanya Technology Corp (南亞科技) up 1.5 percent to end at NT$67.70.
Bucking the uptrend, Largan Precision Co (大立光), a supplier of smartphone camera lenses to Apple Inc, fell 0.24 percent to close at NT$4,140, off a high of NT$4,250, on profit-taking.
“As today’s market attention was largely drawn by TSMC and the semiconductor sector, many non-tech stocks seemed to fall off the radar,” Su said.
In the old economy sector, textile maker Far Eastern New Century Corp (遠東新世紀) fell 1.87 percent to close at NT$31.55, Formosa Plastics Corp (台灣塑膠) lost 0.49 percent to end at NT$101 and Formosa Chemicals & Fibre Corp (台灣化纖) dropped 0.31 percent to close at NT$96.50.
However, U-Ming Marine Transport Corp (裕民航運) gained 4.42 percent to end at NT$36.65 in the wake of an increase in freight fees.
Among the mixed financial stocks, Fubon Financial Holding Co (富邦金控) rose 0.12 percent to close at NT$43.50, while CTBC Financial Holding Co (中信金控) fell 0.49 percent to end at NT$20.50 and Cathay Financial Holding Co (國泰金控) lost 0.12 percent to close at NT$41.05.
“Judging from today’s TAIEX movement, technical resistance ahead of the 10,900-point mark remained stiff, so the main board saw some profit-taking and failed to end above that level,” Su said.
“Investors should pay close attention to the corporate earnings season taking place right now at home and in the US,” Su said. “And do not forget the lingering trade friction between Washington and Beijing.”
Foreign institutional investors on Friday bought a net NT$8.16 billion of shares, Taiwan Stock Exchange data showed.
Elsewhere in Asia on Friday, markets rallied as Williams’ comments were pounced on by investors as indicating that the central bank would unveil a deep interest rate cut at the end of the month.
While a spokesman later clarified that Williams was not outlining Fed policy and was not flagging a half-point cut, analysts said that the remarks provided an insight into how officials were thinking.
Markets wavered this week over how big the bank’s expected reduction would be, with 25 basis points priced in, but traders hoping for 50.
“Williams’ remarks put probabilities of multiple rate cuts higher after strong economic indicators had put doubts on the number of rate reductions this year and how deep the cut will be,” Oanda Corp senior market analyst Alfonso Esparza said.
Asia finished the week on a strong note, despite concerns about the global outlook and a lack of progress in China-US trade talks.
Tokyo’s Nikkei 225 on Friday rose 420.75 points, or 2 percent, to 21,466.99, but fell 1 percent from a close of 21,685.90 on July 12.
Hong Kong’s Hang Seng on Friday gained 303.74 points, or 1.1 percent, to 28,765.40, a 1 percent increase from 28,471.62 a week earlier.
The Shanghai Composite on Friday climbed 23.02 points, or 0.8 percent, to 2,924.20, but slid 0.2 percent from a close of 2,930.55 on July 12.
Seoul’s KOSPI on Friday rose 27.81 points, or 1.4 percent, to 2,094.36, gaining 0.4 percent from 2,086.66 a week earlier.
Singapore gained 0.4 percent and Sydney put on 0.8 percent. Wellington, Manila and Jakarta were also well up, but Mumbai fell more than 1 percent due to disappointment with government plans for a super-rich tax.
Charles Schwab & Co chief global investment strategist Jeffrey Kleintop warned that weakness in the world economy would eventually drag on markets.
“I don’t think a few rates cuts is going to make the difference, whether it’s 25 or 50 basis points at the end of this month,” Kleintop told Bloomberg TV. “While the bond market is pricing in a realistic probability of the slowdown, stocks have gone the other direction this year and may be in for a surprise.”
POWERING UP: PSUs for AI servers made up about 50% of Delta’s total server PSU revenue during the first three quarters of last year, the company said Power supply and electronic components maker Delta Electronics Inc (台達電) reported record-high revenue of NT$161.61 billion (US$5.11 billion) for last quarter and said it remains positive about this quarter. Last quarter’s figure was up 7.6 percent from the previous quarter and 41.51 percent higher than a year earlier, and largely in line with Yuanta Securities Investment Consulting Co’s (元大投顧) forecast of NT$160 billion. Delta’s annual revenue last year rose 31.76 percent year-on-year to NT$554.89 billion, also a record high for the company. Its strong performance reflected continued demand for high-performance power solutions and advanced liquid-cooling products used in artificial intelligence (AI) data centers,
SIZE MATTERS: TSMC started phasing out 8-inch wafer production last year, while Samsung is more aggressively retiring 8-inch capacity, TrendForce said Chipmakers are expected to raise prices of 8-inch wafers by up to 20 percent this year on concern over supply constraints as major contract chipmakers Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and Samsung Electronics Co gradually retire less advanced wafer capacity, TrendForce Corp (集邦科技) said yesterday. It is the first significant across-the-board price hike since a global semiconductor correction in 2023, the Taipei-based market researcher said in a report. Global 8-inch wafer capacity slid 0.3 percent year-on-year last year, although 8-inch wafer prices still hovered at relatively stable levels throughout the year, TrendForce said. The downward trend is expected to continue this year,
Vincent Wei led fellow Singaporean farmers around an empty Malaysian plot, laying out plans for a greenhouse and rows of leafy vegetables. What he pitched was not just space for crops, but a lifeline for growers struggling to make ends meet in a city-state with high prices and little vacant land. The future agriculture hub is part of a joint special economic zone launched last year by the two neighbors, expected to cost US$123 million and produce 10,000 tonnes of fresh produce annually. It is attracting Singaporean farmers with promises of cheaper land, labor and energy just over the border.
A proposed billionaires’ tax in California has ignited a political uproar in Silicon Valley, with tech titans threatening to leave the state while California Governor Gavin Newsom of the Democratic Party maneuvers to defeat a levy that he fears would lead to an exodus of wealth. A technology mecca, California has more billionaires than any other US state — a few hundred, by some estimates. About half its personal income tax revenue, a financial backbone in the nearly US$350 billion budget, comes from the top 1 percent of earners. A large healthcare union is attempting to place a proposal before
RSS