Taipei, Feb. 9 (CNA) Shares in Taiwan closed lower Friday as investors felt the pinch of a plunge on Wall Street overnight amid rising fears over a quicker interest rate cycle in the U.S. market at a time of solid economic recovery, dealers said.
The local main board recouped some of its earlier losses as bargain hunters became active from the late morning session to take advantage of stocks that had been hammered in recent sessions, the dealers said.
However, market sentiment was cautious throughout the session as investors remained concerned by possible volatility in the U.S. market after recent heavy losses, they added.
The weighted index on the Taiwan Stock Exchange (TWSE) ended down 156.77 points, or 1.49 percent, at 10,371.75, after moving between 10,189.04 and 10,392.31, on turnover of NT$150.89 billion (US$5.13 billion).
For the week, the main board fell 754.48 points or 6.78 percent, in the wake of heavy losses in the U.S. market.
The market opened down 1.50 percent Friday and quickly moved to the day's low as selling was sparked by a dive on Wall Street, where the Dow Jones Industrial Average lost 1,033 points, or 4.15 percent, overnight, the dealers said. It was the first time the Dow had dipped below the 24,000-point mark since late November in reflection of rate hike fears, the dealers said.
Selling on the local main board focused on large cap stocks across the board, with contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) and other tech heavyweights leading the downturn during most of the morning session, they said.
After 11 a.m., bargain hunting emerged to prop up the broader market, with buying in select old economy stocks more visible, which helped the weighted index recover from an early low.
The weighted index, nevertheless, fell below the technical resistance level of the 240-day moving average of 10,395 points.
"Falling below 10,395 points has made the main board technically weaker, although the weighted index came off its low by the end of the session," Hua Nan Securities analyst Kevin Su said. "It is unlikely that the local equity market will have a meaningful rebound unless Wall Street stabilizes. But there are no signs that Wall Street will soon turn stable."
Echoing Su, Ta Ching Securities analyst Andy Hsu said he suspected that Friday's bargain hunting came from government-led funds "as the government did not want to see the weighted index fall even further amid the current global turmoil."
On Thursday, the Dow fell more than 500 points for the third time in five days after a drop in the latest weekly jobless benefit claims pointed to a strong economic recovery.
"Now, investors in the global market fear that the U.S. Federal Reserve will speed up its pace of carrying out a rate hike cycle this year on expectations that an economic recovery will boost inflation," Hsu said.
In an interview with Bloomberg Thursday, New York Federal Reserve President Bill Dudley said that if the U.S. economy keeps growing, the Fed is likely to raise interest rates four times this year. The market had been anticipating no more than three interest rate hikes for the year.
Hsu said that investors here again dumped liquid tech stocks such as TSMC, the most heavily weighted stock in the local market, while bargain hunters helped cap these stocks' downturn to some extent by the end of the session.
TSMC fell 2.52 percent to close at NT$232.50, off an early low of NT$228.50, with 65.69 million shares changing hands, while iPhone assembler Hon Hai Precision Industry Co., second to TSMC in terms of market value, lost 1.69 percent to end at NT$87.50, off a low of NT$86.10.
"Bargain hunters seemed to favor old economy stocks in the session, with some of them even rebounding to close above Thursday's closing levels," Hsu said.
Among the rebounding traditional industrial stocks, Formosa Petrochemical Corp. rose 0.43 percent to close at NT$116.00 after hitting a low of NT$111.50, and Tung Ho Steel Enterprise Corp. added 0.99 percent to end at NT$25.40, off a low of NT$24.25. According to the TWSE, foreign institutional investors sold a net NT$18.78 billion- worth of shares on the main board Friday.
Source: Focus Taiwan