Taiwan shares end up after Fed's rate cut

Taipei, Nov. 8 (CNA) Shares in Taiwan moved higher by more than 140 points Friday after the Federal Reserve cut its key interest rates as expected, sparking a rally among tech stocks on the U.S. markets overnight, dealers said.

The local bellwether electronics sector attracted most of the market's attention throughout the trading session, while old economy and financial stocks largely lost their luster, capping the gains on the broader market, dealers added.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended up 145.07 points, or 0.62 percent, at 23,553.89 after moving between 23,509.13 and 23,699.70. Turnover totaled NT$421.78 billion (US$13.14 billion).

The market opened up 0.85 percent and soon reached the day's high rising about 290 points in the early morning session in the wake of a 1.51 percent increase on the tech-heavy Nasdaq index and a 2.27 percent rise on the Philadelphia Semiconductor Index Thursday after a 25-basis point rate cut by the U.S. Federal Reserve.

The electronics sector served as a driver for the upturn, with contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) in focus, dealers said.

However, with the Taiex moving closer to 23,700 points, some investors shifted to the sell side to pocket their earlier gains, which eroded the initial upturn by the end of the session, dealers added.

"The Fed, as expected, cut interest rates as inflation in the United States showed signs of moderating," Concord Securities analyst Kevin Su said.

The cut led treasury yields to move lower, making tech stocks look attractive, according to dealers.

"More importantly, Fed Chair Jereme Powell said he would not resign if Donald Trump asked him to leave, which removed uncertainties from the market," Su said.

Powell was appointed by Trump to chair the Fed in 2017. However, the U.S. president-elect repeatedly lashed out at Powell during his first term, saying he had failed to ease monetary policy quickly enough.

The market had feared that Trump's return would signal the end of Powell's time at the Fed. However, Powell said the president does not have the legal power to fire him, and that he would not resign if asked.

With its American depositary receipts (ADRs) rising 4.12 percent overnight, TSMC, the most heavily weighted stock in the local market, rose 2.35 percent to close at the day's high of NT$1,090.00.

TSMC's gains contributed about 200 points to the Taiex's rise and sent the electronics index and semiconductor subindex higher by 0.97 percent and 1.63 percent, respectively.

Amid optimism toward artificial intelligence (AI) development, second to TSMC in terms of market value, iPhone assembler Hon Hai Precision Industry Co., which also rolls out AI servers, rose 0.46 percent to end at NT$218.00.

Quanta Computer Inc., another AI server maker, gained 0.77 percent to end at NT$328.00; Wistron Corp., a third AI supplier, rose 2.92 percent to close at NT$123.50; and AI PC vendor Asustek Computer Inc. ended up 2.31 percent at NT$621.00.

"When the market spotlight largely focused on TSMC, many other tech stocks moved in the doldrums. Without TSMC, the index would have fallen to negative territory," Su said.

Su further noted that led by TSMC, the electronics sector accounted for about 70.6 percent of Friday's total turnover on the main board. "It was no surprise that nontech industries largely languished."

Meanwhile, on the back of hopes of robust container cargo demand before Trump, who has threatened to raise tariffs, takes office, Evergreen Marine Corp. rose 1.63 percent to close at NT$218.00, and rival Yang Ming Marine Transport Corp. gained 2.58 percent to end at NT$71.50.

"Judging from today's market movement, the Taiex faced stiff technical resistance ahead of 23,713 points, an intraday high on Oct. 18," Su said. "TSMC is expected to continue to dictate the Taiex so as long as the stock steams ahead, the main board will challenge that level."

According to the TWSE, foreign institutional investors sold a net NT$12 million worth of shares on the main board Friday.