Taipei, Shares in Taiwan closed moderately lower Monday as investors reacted to losses in other regional markets amid dampened hopes of a rate cut by the U.S. Federal Reserve, dealers said.
Selling focused on the bellwether electronics sector and spread to old economy and financial stocks throughout the session before buying emerged late, helping the broader market recoup some of its earlier losses, they said.
The weighted index on the Taiwan Stock Exchange (TWSE), the Taiex, ended down 34.51 points, or 0.32 percent, at 10,751.22, after moving between 10,708.92 and 10,781.11, on turnover of NT$95.16 billion (US$3.05 billion).
The market opened down 0.40 percent as U.S. markets saw early gains eroded on Friday after Washington reported that the U.S. economy added 224,000 jobs, beating an earlier market estimate of 165,000, dealers said.
"The better than expected June job data in Washington lowered expectations that the Fed will soon move on interest rate cuts," Dayu International Securities Investment Consultant analyst Chang Chih-cheng said.
Before the release of the June jobs figures, investors worldwide had expected the Fed to start to ease its monetary policy by cutting interest rates at a two-day policymaking meeting starting on July 30.
"A rate cut by the Fed was expected to push down the U.S. dollar, which would have caused funds to flow into non-greenback denominated assets. But the solid jobs report led investors in the region to think otherwise, so stocks in the region generally moved lower," Chang said.
"Many investors were cautious and preferred to stay on the sidelines, which kept turnover low," Chang said. "So we had another quiet day."
The weakness of the Taiex remained throughout the session Monday as contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) pulled down the electronics sector and non-high-tech stocks also struggled to gain traction.
Chang said the electronics sector was the victim of the selling caused by the dampened rate cut hopes, while the last minute buying helped tech stocks stem their losses.
TSMC, the most heavily weighted stock in the local market, fell 0.21 percent to close at NT$242.50 with 27.76 million shares changing hands, but came off an early low of NT$240.00. Led by TSMC, the electronics sector fell 0.23 percent and the semiconductor sub-index dropped 0.53 percent.
TSMC's selling also affected other semiconductor stocks with United Microelectronics Corp., a smaller rival of TSMC, down 1.06 percent to end at NT$13.95, and integrated circuit packaging and testing services provider ASE Technology Holding Co. down 2.57 percent to end at NT$64.50.
Bucking the downturn, Largan Precision Co. rose 4.18 percent to close at NT$4,115.00 as investors believe the company will benefit from a strong third quarter, traditional a peak season in the electronics component sector.
In addition, iPhone assembler Hon Hai Precision Industry Co. gained 1.02 percent to end at NT$79.00 after reporting the highest-ever sales for June for the company.
The reduced rate cut hopes also sent many old economy stocks lower, dealers said.
Among old economy heavyweights, Formosa Plastics Corp. lost 0.48 percent to close at NT$104.00, and Nan Ya Plastics Corp. fell 0.82 percent to end at NT$72.50, while China Steel Corp., the largest steel maker in Taiwan, rose 0.40 percent to close at NT$24.80.
In the financial sector, which ended down 0.31 percent, Fubon Financial Holding Co. lost 0.23 percent to close at NT$44.20, while Mega Financial Holding Co. ended unchanged at NT$31.40.
"The local market needs higher turnover to get it past stiff technical resistance ahead of the 5-day moving average of 10,784 points," Chang said, pointing to the need for a turnover of about NT$120 billion.
According to the TWSE, foreign institutional investors sold a net NT$7.40 billion in shares Monday.
Source: Focus Taiwan News Channel