Shares in Taiwan extended their upward momentum yesterday to leave the benchmark TAIEX above 8,200 points on follow-through buying as many investors remained optimistic that the US Federal Reserve will not wind down its quantitative easing program any time soon.
However, other Asian markets were mixed, with a record-breaking close on Wall Street offset by profit-taking after the previous day’s broad gains.
On Thursday, the Dow surged 1.11 percent and the S&P 500 rallied 1.36 percent, while the NASDAQ added 1.63 percent to end at its highest level since September 2000.
In Taipei, the TAIEX closed up 40.95 points, or 0.5 percent, at the day’s high of 8,220.49, with turnover hitting NT$86.74 billion (US$2.90 billion) during the session.
“Following a boisterous session yesterday [Thursday], many investors calmed down today and were reluctant to chase prices,” Mirae Asset Management analyst Arch Shih (施博元) said, referring to the reduced turnover.
“After the Dow Jones Industrial Average hit a fresh record high overnight, many investors turned cautious amid fears that Wall Street would encounter a major pullback, which could affect the global markets,” Shih said.
Shih said the local bourse is now in consolidation mode.
“Although the index stood above 8,200 points, local shares may encounter high technical hurdles down the road,” he said.
Elsewhere in Asia, Japan’s Nikkei edged higher as traders bought back into the US dollar following comments from the head of the US Federal Reserve that its stimulus program would be kept in place for some time.
Tokyo rose 0.23 percent, or 33.67 points, to 14,506.25 and Sydney added 0.17 percent, or 8.2 points, to close at 4,973.9. Seoul dipped 0.41 percent, or 7.62 points, to 1,869.98.
Shanghai fell 1.62 percent, or 33.50 points, to 2,039.49 as profit-takers moved in after enjoying a more than 3 percent rally Thursday.
Hong Kong slipped 0.75 percent, or 160.21 points, to 21,277.28.
Regional sentiment was largely positive after the Dow and S&P 500 surged to new highs on Wall Street as investors cheered US Fed Chairman Ben Bernanke’s statement that the US central bank would continue its bond-buying “for the foreseeable future.”
While he said the US economy was showing signs of strength, Bernanke was still concerned about high unemployment and inflation.
Bernanke’s comments came as a surprise, with most economists expecting the bank to begin winding down the easy-money scheme that was introduced in September last year and has fueled a rally in global markets.
The news sent the US dollar tumbling about 2.5 percent against the yen on Thursday before it picked up a tad to sit at ￥98.90 New York’s close on Thursday.
In European trade on Friday, the greenback was at ￥99.14. The euro fetched US$1.3047 and ￥129.36 compared with US$1.3092 and ￥129.50.
In Taipei on Friday, the US dollar fell against the New Taiwan dollar, shedding NT$0.02 to close at NT$29.932 due to strong foreign institutional buying in the local bourse, dealers said.
It was the second consecutive session that the greenback closed below the NT$30 mark against the local currency, but the pace of its slide slowed compared with the previous session, they said.