The TAIEX yesterday made a strong comeback, as an overnight rally on Wall Street and expectations of a dovish turn by the US Federal Reserve sparked buying on the local bourse.
With the US dollar weakened amid anticipation that the Fed would ease the pace of its rate hike cycle, local investors rushed to pick up large-cap tech stocks, focusing on semiconductors, while buying later spread to biotech and petrochemical stocks.
The TAIEX closed up 276.04 points, or 2.08 percent, at 13,576.52. Turnover totaled NT$181.294 billion (US$5.71 billion), with foreign institutional investors selling a net NT$6.17 billion of shares on the main board, Taiwan Stock Exchange data showed.
Photo: CNA
“The US markets kept dictating the local main board as the latest US PMI [purchasing managers’ index] allayed fears over an aggressive Fed,” Moore Securities Investment Consulting Co (摩爾投顧) analyst Adam Lin (林漢偉) said.
The US PMI results for last month fell short of earlier market predictions, causing 10-year US Treasury yields to dip 15 basis points overnight and sending the US dollar lower on the Taipei foreign exchange market yesterday.
Taiwan Semiconductor Manufacturing Co (台積電) rose 2.88 percent to close at NT$429, contributing about 100 points to the TAIEX’s gains and pushing the electronics sector and semiconductor subindex up by 2.74 percent and 3.22 percent respectively.
“As the electronics sector accounted for almost 60 percent of Tuesday’s turnover, many non-tech stocks attracted relatively low buying,” Lin said. “However, the biotech industry stole part of the spotlight on bargain hunting.”
The biotech sector rose 2.93 percent.
The petrochemical sector rose 1.15 percent, while the financial sector underperformed the broader market, increasing only 0.63 percent.
“Today’s gains helped the TAIEX overcome the nearest technical resistance ahead of the five-day moving average of 13,460 points, which is expected to allow the main board to move higher,” Lin said.
“I expect the government will come up with measures to boost the market, and if turnover expands to NT$200 billion or more, the TAIEX is likely to challenge 13,773 points — the next technical hurdle of the 10-day moving average — soon,” Lin said, referring to a regular meeting scheduled by the National Stabilization Fund’s committee for tomorrow.
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