Taipei, June 20 (CNA) The Taiwan stock exchange's benchmark index rallied above 7,300 Wednesday after investors followed the lead of gains posted on Wall Street overnight, dealers said.
Select large cap stocks attracted bargain hunting to boost the broader market, with investors buoyed by expectations that central banks in major economies will come up with measures to boost the global economy, they said.
Turnover remained thin, however, amid lingering concerns over the debt problems in the eurozone, in particular after the 10-year bond yield in Spain hovered above 7 percent, they added.
The weighted index closed up 61.50 points, or 0.84 percent, at the day's high of 7,334.63, off an early low of 7,281.41, on turnover of NT$67.13 billion (US$2.25 billion).
The market opened up 0.44 percent in a knee-jerk reaction to gains on Wall Street, driven by expectations that the U.S. Federal Reserve will announce further stimulus measures after concluding a two-day policymaking meeting later in the day, dealers said.
With buying in market heavyweights, such as Taiwan Semiconductor Manufacturing Co., flat panel maker Chimei Innolux Corp. and select old economy stocks accelerating late in the session, the index managed to push well above the 7,300-point level before the market's close, they said.
"Encouraged by a rising Wall Street, more and more investors expect the world's central banks, in particular the U.S. Fed, to do something to take on the slowing global economy," said E. Sun Securities Investment Consulting analyst Liu Yi-ho.
Liu said that while few anticipate that the U.S. Fed will launch a third round of quantitative easing (QE3), the market is widely expecting the central bank to continue to sell short-term bonds and buy long-term debt to maintain ample liquidity.
"Look at the gains posted by other regional markets, such as Tokyo and Hong Kong. Such hopes are gathering momentum at the moment," Liu said.
Amid bargain hunting in the high-tech sector, TSMC closed up 1.37 percent at NT$81.60, and Chimei Innolux ended up 2.07 percent at NT$12.30.
Among old economy stocks, textile maker Far Eastern New Century closed up 3.17 percent at NT$30.95, and Nan Ya Plastics ended up 1.42 percent at NT$57.30.
"But many investors still took to the sidelines, which kept turnover low," Liu said. "Unless daily trading volume expands to NT$80 billion or even higher, it is unlikely that the local bourse will make a big leap any time soon."
Liu said the next level where stiff technical resistance can be expected is around 7,350 points.
In Wednesday trading, the textile sector scored the highest gains among the eight major sectors of the market, finishing up 1.73 percent. Plastics and chemical shares rose 1.16 percent, financials gained 0.97 percent, and machinery and electronics stocks added 0.80 percent.
Paper and pulp stocks rose 0.51 percent, construction shares gained 0.48 percent, textiles added 0.36 percent, and cement stocks closed up 0.27 percent.
(By Frances Huang)