Local shares on Friday staged a technical rebound from a slump a session earlier as investors took cues from gains posted by US markets overnight on the back of improving retail sales figures in Washington, dealers said.
The bellwether electronics sector led the local main board higher as the semiconductor segment got a boost from quarterly results reported by US-based IC designer Nvidia Corp, they said.
However, turnover remained moderate, as many investors stayed on the sidelines and appeared reluctant to chase prices amid lingering concerns over trade friction between the US and China, they added.
The TAIEX on Friday closed up 93.76 points, or 0.91 percent, at 10,420.89, after moving between 10,318.37 and 10,456.32, on turnover of NT$118.88 billion (US$3.79 billion). That was a 0.7 percent drop from a close of 10,494.49 on Aug. 8.
The market was closed on Aug. 9 due to Typhoon Lekima.
On Thursday, the weighted index ended down 0.96 percent after the Dow Jones Industrial Average plunged more than 800 points.
Bouncing back, the TAIEX on Friday opened up 0.18 percent in a knee-jerk reaction to a 0.39 percent increase by the Dow Jones and a 0.25 percent rise by the S&P 100 index overnight after Washington reported that retail sales grew 0.7 percent last month after a 0.3 percent increase in June, the dealers said.
Selling on the local main board accelerated, as the momentum of tech stocks, in particular in the semiconductor sector, accelerated, and Nvidia shares jumped 7 percent at one point in after-hours trading, beating an earlier market estimate, they said.
“The better retail sales data last month helped investors at home and abroad fend off fears over a slower US economy, as well as a weakening global economy,” Hua Nan Securities Investment Management Co (華南投顧) analyst Kevin Su (蘇俊宏) said. “So the US markets rebounded and the Taipei market followed suit.”
Another driver to Friday’s upturn on the local main board came from Nvidia’s earnings, which lifted those of its Taiwanese counterparts, including contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), he said.
“The bellwether electronics sector served as an anchor for today’s market again,” Su said.
In the wake of Nvidia’s US$1.24 in earnings per share for the April-to-June period, compared with an earlier market estimate of US$1.15, TSMC, the most heavily weighted stock on the local market, rose 0.81 percent to close at NT$250 and United Microelectronics Corp (聯電), a smaller rival of TSMC, gained 3.49 percent to end at NT$13.35.
IC designer MediaTek Inc (聯發科) also grew 1.74 percent to close at NT$322.
Led by these large-cap semiconductor stocks, the electronics sector closed up 0.78 percent and the semiconductor subindex ended up 0.89 percent.
Buying also spread to consumer electronics stocks, with iPhone assembler Hon Hai Precision Industry Co (鴻海精密) up 0.56 percent to close at NT$72 and Pegatron Corp (和碩), a smaller iPhone assembler, up 1.8 percent to end at NT$51.
“Their gains reflected optimism toward tech device sales in the fourth quarter, a traditional peak season,” Su said.
The financial sector closed up 1.28 percent as large-cap stocks played catch-up with the electronics sector, he said.
Among the gaining financial stocks, Fubon Financial Holding Co (富邦金控) rose 2.98 percent to close at NT$43.15, Mega Financial Holding Co (兆豐金控) added 1.25 percent to end at NT$28.25 and Cathay Financial Holding Co (國泰金控) grew 0.51 percent to close at NT$39.55.
Old economy stocks also moved higher, in line with the broader market, the dealers said.
In the petrochemical sector, Formosa Plastics Corp (台灣塑膠) rose 0.89 percent to close at NT$91.10 and Nan Ya Plastics Corp (南亞塑膠) gained 1.82 percent to end at NT$67.20, despite a fall in international crude oil prices overnight.
Meanwhile, food brand Uni-President Enterprises Corp (統一企業) rose 1.31 percent to close at NT$77.50 and textile firm Far Eastern New Century Corp (遠東新世紀) added 2.91 percent to NT$28.30.
“Today’s gains helped the TAIEX stand above the 240-day moving average of 10,373 points, indicating that the local main board has turned technically healthier,” Su said.
“However, the moderate turnover showed that many investors remained bothered by the Washington-Beijing trade dispute, which could continue to move the global financial markets since it is far from over,” Su added.
Despite the index’s gains on Friday, foreign institutional investors stood on the sell side, registering a net sell of NT$10.09 billion of shares on the main board, Taiwan Stock Exchange data showed.
Elsewhere in Asia, markets were jittery as a volatile week marked by lingering worries over the US-China trade war and its effects on the world economy drew to a close.
Investors remained anxious, seeking out safe havens in the form of US Treasury assets and gold, which continued to hover at more than US$1,500.
The yield on the 10-year Treasury bond on Wednesday slid below the yield on the two-year note, meaning the short-term interest rates were higher than the longer-term rates.
The so-called “inversion” phenomenon has been a reliable harbinger of recession for decades since it suggests that markets have a negative long-term outlook.
On Thursday, the yield on the 30-year bond hit an all-time low, while the 10-year note plunged to its lowest level in three years before staging a tepid recovery.
“Better-than-expected US data probably helped sentiment in US stock markets, though it seems to have been largely ignored by the bond market,” VM Markets managing partner Stephen Innes said.
Asian markets struggled to eke out marginal gains.
Hong Kong was a bright spot, with the Hang Seng on Friday rising 238.76 points, or 0.9 percent, to 25,734.22, but was still down 0.8 percent from a close of 25,939.30 on Aug. 9.
The Shanghai Composite on Friday edged up 8.03 points, or 0.3 percent, to 2,823.82, surging 1.8 percent from 2,774.75 a week earlier.
Tokyo’s Nikkei 225 on Friday slid 36.80 points, or 0.2 percent, to 20,368.85, a plunge of 1.5 percent from a close of 20,684.82 on Aug. 9.
Seoul’s KOSPI on Friday shed 11.20 points, or 0.6 percent, to 1,927.17, sliding 0.5 percent from 1,937.75 a week earlier.
Economists have warned for months that trade tensions would drag down sentiment, which was already suffering due to China’s economic slowdown and fears of Brexit’s impact on Britain and Europe.
The tensions have already hit global demand, with data this week showing China’s industrial output had plummeted to a 17-year low.
“There remains no end in sight” to the trade frictions, National Australia Bank Ltd senior analyst Tapas Strickland said in a commentary.
“It is clear that China is willing to play the long game, meaning that to de-escalate tensions, any compromise will have to come from the US side,” he said, citing an editorial from the Chinese state-run Global Times.
However, with US rhetoric showing few signs of softening, investors are not holding their breath for a speedy resolution.
After markets closed on Thursday, US President Donald Trump said that trade negotiations set for next month were “still on,” less than a week after suggesting they might be canceled.
“We’re talking and they’re offering things that are very good,” Trump said, before following it up with a warning that Washington could respond to any moves from Beijing with “the ultimate form of retaliation.”
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