Taiwan shares stage significant rebound led by tech stocks

Taipei, Aug. 1 (CNA) Shares in Taiwan made a significant comeback Thursday morning on the back of a rally among tech heavyweights as investors took cues from the significant gains enjoyed by their counterparts in U.S. markets overnight, dealers said.

Market sentiment improved following U.S. Federal Reserve Chair Jerome Powell's comments that a rate cut "could be on the table," which raised hopes that the American central bank will lower its key interest rates as early as September, dealers added.

As of 10:09 a.m., the Taiex, the benchmark weighted index on the Taiwan Stock Exchange (TWSE), had risen 331.40 points, or 1.49 percent, to 22,530.75 after briefly breaching the 10-day moving average at around 22,600 points.

Contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock in the local market, gaining 1.82 percent to reach NT$951.00 (US$ 29.04) as of 10:09 a.m.

The bellwether electronics index had added 1.76 percent, led by TSMC driving an upturn in the broader market. Buying was sparked by a 2.64 percent increase on the tech-heavy Nasdaq index and a 7.01 percent rise on the Philadelphia Semiconductor Index in the U.S. markets overnight.

"TSMC followed (U.S.-based AI chip designer) Nvidia's surge of more than 12 percent to lead the Taiex to move higher as Advanced Micro Devices, Inc. (AMD) delivered better-than-expected earnings," MasterLink Securities analyst Tom Tang said. AMD also rose 4.36 percent overnight.

Among other semiconductor stocks, IC packaging and testing services provider ASE Technology Holding Co. had added 2.00 percent to NT$153.00 while United Microelectronics Corp., a smaller contract chipmaker, had gained 5.56 percent to reach NT$53.20.

"The rally on the Taiex and on the U.S. markets also reflected optimism toward a rate cut cycle to be engineered by the Fed after Powell's comments," Tang said. "Interest rate sensitive tech stocks largely hailed Powell's dovish statement."

Markets at home and abroad have expected there to be about a 90 percent chance that the Fed will start to cut interest rates in September, Tang said.

As the markets had previously anticipated, the American central bank left its key interest rates unchanged after a two-day policy-making meeting wrapped up overnight.

Outside the tech sector, the food index had fallen 2.78 percent as of 10:09 a.m. after heavyweight Uni-President Enterprises Corp. shed 1.98 percent to arrive at NT$79.30.

Tang attributed the fall in the food industry to a strategy of investors moving their funds out of the sector to park their money in large cap tech stocks.

"It is worth watching whether the Taiex will well stand above the 10-day moving average to become technically healthier," Tang said. "It will depend on how U.S. markets will move during the current earnings season."

U.S. tech giants such as Apple and Amazon are scheduled to release their second-quarter earnings on Thursday.