The TAIEX retained its momentum from Friday to close above 14,100 points yesterday, as buying continued amid reduced concerns over an aggressive US Federal Reserve in the wake of moderating inflation last month.
With the bellwether electronics sector moving higher and buying rotated to large-cap old-economy stocks — such as those in the cement, textile, transportation and petrochemical industries — the TAIEX rose 167.34 points, or 1.19 percent, to close at 14,174.90.
Turnover on the main board totaled NT$274.02 billion (US$8.81 billion), with foreign institutional investors purchasing a net NT$37.78 billion of shares, Taiwan Stock Exchange data showed.
Photo: CNA
“Market sentiment improved a lot as investors’ appetite to take risks grew, and many of them rushed to purchase more stocks today after Friday’s rally,” Mega International Investment Services Corp (兆豐國際投顧) analyst Alex Huang (黃國偉) said.
“Buying in local large-cap semiconductor stocks came after a rally on the US markets showed fears over an aggressive Fed have faded,” he said.
The US consumer price index rose 7.7 percent last month, slower than the 7.9 percent that the market had previously anticipated, the US Department of Labor reported on Thursday.
Contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) rose 0.79 percent to close at NT$445, but came off a high of NT$450. The local electronics sector and the semiconductor sub-index both rose 0.86 percent.
In the past two trading sessions, TSMC has soared 9.2 percent.
“After the rally, the stock has moved closer to its nearest stiff technical resistance ahead of NT$450,” Huang said. “It was not surprising that the strength was capped today.”
“With foreign funds returning to the region, ample liquidity sparked rotational buying, with large old-economy stocks in focus,” Huang said, referring to a stronger New Taiwan dollar against the US dollar, amid hopes that the Fed might slow the pace of rate hikes.
The NT dollar rose NT$0.294 to close at NT$31.116 against the US dollar in Taipei trading.
The cement sector rose by 4.26 percent on hopes that China’s easing of COVID-19 restrictions for arrivals would benefit international demand. A spike in international crude oil prices, also due to China’s easing of COVID-19 protocols, boosted the petrochemical and textile sectors by 1.86 percent and 2.04 percent respectively.
The transportation sector rose 2.08 percent, and the financial sector edged up 0.42 percent.
“While the US dollar weakened sharply in recent sessions due to the October consumer price index figure, the Fed will still raise rates though likely at a slower pace,” Huang said. “After consolidating, I think the greenback will return to an uptrend, which is still something to watch closely.”
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