The TAIEX closed lower yesterday after fluctuating in consolidation mode ahead of the release of US job data later in the day.
Dealers reported that investors, awaiting clues from the upcoming job report, held off during the session, despite reduced fears after US Federal Reserve Chairman Jerome Powell struck a softer tone earlier this week.
The TAIEX ended down 0.28 percent at 14,970.68, with turnover totaling NT$223.1 billion (US$7.3 billion), lifting the TAIEX to end the week up 192.17 points from 14,778.51 points on Friday last week.
Investors took cues from a lackluster showing on the US markets, where the Dow Jones Industrial Average lost 0.56 percent and the tech-heavy NASDAQ Composite Index rose only 0.13 percent overnight ahead of the release of the US nonfarm payroll report for last month.
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the market’s most heavily weighted stock, came under pressure along with other semiconductor heavyweights.
iPhone assembler Hon Hai Precision Industry Co (鴻海精密) — second to TSMC in terms of market capitalization posted — lent some support to the broader market.
“Market sentiment seemed to have improved in recent sessions after Powell’s speech on Wednesday,” Hua Nan Securities Co (華南永昌證券) analyst Kevin Su (蘇俊宏) said. “Still, before the job data, many investors preferred to take a pause after yesterday’s rally.”
On Wednesday, Powell said the pace of interest rate increases would likely slow in the current rate hike cycle, potentially starting this month.
However, Powell cautioned that the Fed’s monetary policy was likely to stay tight for some time until signs of progress on inflation emerged.
“Since the beginning of November, the TAIEX has gained significantly, and it was no surprise that caution set in before the job data is out amid fears over a possible technical pullback,” Su said.
Before yesterday, the local main board had moved up by 2,063.05 points, or 15.93 percent, since the beginning of last month.
“TSMC fell victim to profit-taking, but fortunately, Hon Hai and its subsidiaries scored gains to offset the losses suffered by the semiconductor industry. This was due to optimism toward the company’s efforts in developing the electric vehicle business to diversify its product portfolio,” Su said.
Outperforming the broader market, Hon Hai, also known as Foxconn (富士康), gained 2.43 percent to close at NT$105.50.
At the other end of the market, TSMC lost 1.20 percent to close at NT$492.50, as the stock faced stiff technical resistance ahead of the NT$500,00 mark.
Bucking the downward trend, power management integrated circuit designer Silergy Corp (矽力杰) soared 10 percent to close at NT$544.00, and Powerchip Semiconductor Manufacturing Corp (力積電), another smaller contract chipmaker, rose 1.76 percent to end at NT$34.60.
Foreign institutional investors sold a net NT$50.52 million worth of shares on the main board yesterday, the Taiwan Stock Exchange said.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
Hong Kong authorities ramped up sales of the local dollar as the greenback’s slide threatened the foreign-exchange peg. The Hong Kong Monetary Authority (HKMA) sold a record HK$60.5 billion (US$7.8 billion) of the city’s currency, according to an alert sent on its Bloomberg page yesterday in Asia, after it tested the upper end of its trading band. That added to the HK$56.1 billion of sales versus the greenback since Friday. The rapid intervention signals efforts from the city’s authorities to limit the local currency’s moves within its HK$7.75 to HK$7.85 per US dollar trading band. Heavy sales of the local dollar by
The Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to
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