Local shares moved sharply higher yesterday as buying emerged after US Federal Reserve Chair Jerome Powell struck a dovish tone on monetary policy at the annual symposium in Jackson Hole, Wyoming, on Friday.
While interest was seen almost across the board, late-session buying was more apparent in the financial sector and the bellwether electronics sector, pushing the TAIEX to end up 186.59 points, or 1.08 percent, at 17,396.52.
Turnover was NT$269.49 billion (US$9.69 billion), with foreign institutional investors buying a net NT$21.23 billion of shares on the main board, Taiwan Stock Exchange data showed.
Photo: Reuters
“Powell’s dovish tone did assuage worries among many investors at home and abroad about a rate hike cycle at a time when the Fed is prepared to scale down its asset purchases,” Cathay Futures Consultant Co (國泰證期顧問) analyst Tsai Ming-han (蔡明翰) said.
In his speech, Powell said the timing and the pace of the downsizing of asset purchases by the Fed “will not be intended to carry a direct signal regarding the timing of interest rate liftoff, for which we have articulated a different and substantially more stringent test.”
“As such, it is not necessary for foreign investors to move their funds back any time soon, and liquidity levels are expected to remain high on the local equity market,” Tsai said. “The TAIEX is still dictated by rotational buying amid ample funds.”
Tsai said the financial sector continued its momentum from a session earlier on rotational buying with large-cap stocks leading the uptrend in the wake of their improving bottom lines.
Dealers said the electronics sector also drove the TAIEX higher, with the sub-index rising 1.08 percent on late-session buying. The semiconductor sub-index rose 1.27 percent.
The petrochemical sector climbed 0.96 percent in the wake of higher international crude oil prices, as Hurricane Ida forced the shutdown of more than 95 percent of oil production in the Gulf of Mexico, dealers said.
“Despite the gains on the TAIEX, turnover remained below the NT$300 billion mark, indicating that many investors stayed on the sidelines,” Tsai said. “It is possible the main board will consolidate for some time unless turnover expands to top the average of NT$365 billion over the past 20 trading sessions.”
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