Shares in Taiwan recorded their third-heaviest point decline in history yesterday after a plunge on Wall Street on Friday amid renewed fears over the US Federal Reserve turning hawkish.
The technology sector bore the brunt of losses as investors cashed out following a breathtaking surge over the past few months powered by a race into all things linked to artificial intelligence (AI).
News that Iran and Israel had traded fire sparked worries about an escalation of the Middle East crisis, adding to the gloomy mood on trading floors and sending oil prices surging more than 5 percent.
Photo: CNA
The TAIEX ended down 1,568.16 points, or 3.48 percent, at 43,502.78, while the New Taiwan dollar fell sharply against the US dollar, losing NT$0.105 to close at NT$31.580.
Yesterday’s fall in the TAIEX was the third-steepest on record, after a fall of 2,065.87 on April 7 last year, and 1,807.21 on Aug. 5, 2024, Taiwan Stock Exchange data showed.
“The losses largely reflected the US tumble on Friday after the much stronger May job data,” Hua Nan Securities Co (華南永昌證券) analyst Kevin Su (蘇俊宏) said, referring to the latest US nonfarm payroll data in which 172,000 jobs were created, double a market estimate.
That data “will put the Fed in a tough spot on rate cuts and could even lead to a rate hike later this year,” Su said.
Contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which accounts for more than 40 percent of total market value, lost 2.96 percent. Smartphone IC designer MediaTek Inc (聯發科) fell 5.35 percent and iPhone assembler and AI server maker Hon Hai Precision Industry Co (鴻海精密), also known as Foxconn Technology Group (富士康), dropped 5.27 percent.
As listed companies would have to report last month’s sales by today, “the market is expecting heavyweights like TSMC to report strong revenue to support the TAIEX,” Su said.
Elsewhere in Asia, Seoul’s KOSPI stock index tanked 8.3 percent as chipmaker Samsung Electronics Co shed more than 10 percent and rival SK Hynix Inc lost 7.7 percent.
Japan’s benchmark Nikkei 225 dropped 3.9 percent with market darlings across the semiconductor supply chain falling furthest. There were also hefty losses in Hong Kong, Shanghai, Singapore, Manila, Jakarta, Mumbai, Wellington and Bangkok.
The market was closed in Sydney for the King’s Birthday, a holiday.
Meanwhile, fears about a re-escalation of the Iran war pushed crude prices sharply higher yesterday after Israel said it had struck targets in western and central Iran.
Brent crude jumped as much as 5.1 percent, and West Texas Intermediate crude climbed 4.8 percent.
“Fading hopes for progress in Middle East peace negotiations kept energy markets on edge, and a handful of disappointing guidance updates from major technology companies interrupted what had become an increasingly one-way artificial intelligence trade,” SPI Asset Management managing partner Stephen Innes said.
Additional reporting by AFP
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