Taipei--Shares in Taiwan closed slightly higher Thursday with earlier gains eroded, after moving in a volatile session amid renewed concern over a possible interest rate hike by the U.S. Federal Reserve, dealers said.
While select market heavyweights in the electronics and old economy sectors remained in the doldrums, the financial sector was boosted by hopes that higher interest rates will bolster banks' bottom lines due to a wider interest spread, the dealers said.
The weighted index on the Taiwan Stock Exchange ended up 17.02 points, or 0.18 percent, at 9,691.80, after moving between 9,646.34 and 9,774.60, on turnover of NT$101.60 billion (US$3.30 billion).
The market opened up 0.54 percent and rose to the day's high in a knee-jerk reaction to a rally on Wall Street, where the Dow Jones Industrial Average breached the 21,000-point mark to hit a record high overnight after U.S. President Donald Trump asked Congress to pass a US$1 trillion infrastructure plan to boost the economy, the dealers said.
But with the local weighted index moving closer to 9,800 points, selling set in, focusing on both electronics and old economy stocks to push down the main board into negative territory before buying in late trading emerged to lift the index back into the black at the end of the session, they said.
"After the gains in the early morning session in the local market, investors suddenly shifted their attention to the possibility of an interest rate hike by the Fed after the U.S. economy has been recovering," Mega International Investment Services Corp. analyst Alex Huang said.
Huang said that fears over a rate hike by the Fed have been boosted by several officials from the U.S. central bank, including New York Fed President William Dudley, who raised hopes that the Fed will tighten its monetary policy. Dudley said in an interview with CNN that that he sees a rate hike in the "relatively near future."
"The chances of the Fed raising its key interest rates in the upcoming policymaking meeting (scheduled for mid-March) has increased to 80 percent from the previous about 30 percent. That's why many investors here shifted to the sell side later in Thursday's session," Huang said.
Among the falling stocks in the electronics sector, integrated circuit packaging and testing services provider Siliconware Precision Industries Co. (??) fell 0.41 percent to close at NT$48.30, and IC designer MediaTek Inc. (???) lost 0.67 percent to end at NT$223.50.
However, on the back of the late session buying, Largan Precision Co. (???), a smartphone camera lens supplier to Apple Inc., rose 0.22 percent to close at NT$4,485.00, off an early low of NT$4,450.00, to remain the most expensive stock in Taiwan.
Hon Hai Precision Industry Co. (??), an assembler of iPhones and iPads for Apple, gained 0.67 percent to close at NT$89.60, after hitting a low of NT$88.80, on the back of late session buying, while Taiwan Semiconductor Manufacturing Co. (???), the most heavily weighted stock in the local market, ended unchanged at NT$186.00, off an early low of NT$185.00.
In the old economy sector, Formosa Plastics Corp. (??) fell 0.69 percent to close at NT$90.40, off an early low of NT$89.30, and Nan Ya Plastics Corp. (??) lost 0.69 percent to end at NT$72.00, recovering from a low of NT$70.60.
The financial sector outperformed the broader market, up 0.6 percent at the close after moving above the previous closing level throughout the session on rate hike hopes, the dealers said.
Fubon Cathay Financial Holding Co. (???) gained 0.40 percent to close at NT$49.80, and Cathay Financial Holding Co. (???) rose 1.88 percent to end at NT$48.75.
"The late session buying showed that some investors were still willing to buy at lows, and the local main board had not turned weaker technically," Huang said. "An uptrend remained intact after consolidation."
Source: Focus Taiwan News Channel