The TAIEX yesterday plunged 2.41 percent to close at 13,778.19 points in a sell-off triggered by Friday’s losses on Wall Street amid concerns over US Federal Reserve rate hikes.
The index lost 340.19 points. Turnover totaled NT$217.81 billion (US$6.84 billion), with foreign institutional investors selling a net NT$7.85 billion of shares on the main board, Taiwan Stock Exchange data showed.
Declines in the bellwether electronics sector weighed on the market. Rising interest rates tend to pull investors away from dividend-paying tech stocks.
Photo: CNA
Old-economy and financial stocks also came under heavy selling pressure, pushing the TAIEX below the nearest technical resistance level of 13,928 points, which was the intraday low on July 12.
“As the TAIEX failed to sustain itself above 13,928 points today, the main board has become technically fragile,” MasterLink Securities Corp (元富證券) analyst Tom Tang (湯忠謙) said. “The weakness simply reflects worries that the Fed will continue to act aggressively after a 75-basis-point rate hike in September.”
Fed Chairman Jerome Powell on Wednesday said that he and his colleagues were “strongly committed to bringing inflation back down to our 2 percent goal.”
Meanwhile, the “dot plot” which the Fed uses to signal its outlook for the path of interest rates, indicated there would be no rate cuts until 2024.
Last month, the US consumer price index rose 8.3 percent, moderating from 8.5 percent in July, but beat a market estimate of 8.1 percent.
“The rate hike cycle in the US continues to prompt foreign institutional investors to cut their holdings. And liquid tech heavyweights, again, fell victim to the sell-off, despite government intervention,” Tang said.
The electronics sector lost 2.42 percent, with the semiconductor sub-index falling 2.42 percent. The transportation sector led old economy stocks lower throughout the session, plunging 6.15 percent.
“Selling among shipping stocks was sparked by falling freight rates at a time when a weakening global economy dragged down demand,” Tang said, referring to the Shanghai Containerized Freight Index, which fell more than 11 percent on Friday.
The financial sector lost 1.62 percent, the construction sector dropped 2.91 percent, the steel sector fell 3.31 percent, and the biotechnology and medical care sector lost 4.02 percent.
“As the Dow Jones Industrial Average fell below 30,000 points, more losses are likely to follow and continue to affect sentiment in Taiwan,” Tang said. “So, it is hard to predict where the TAIEX will find the next nearest technical support.”
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