Taiwan shares make comeback after U.S. rebound on rate cut hopes

Taipei, Aug. 5 (CNA) Shares in Taiwan pulled out of their weakness of the previous two sessions on Tuesday after a strong showing by U.S. markets overnight amid growing optimism over a rate cut in the near future by the U.S. Federal Reserve, dealers said.

After a fall of about 160 points in the past two sessions, the Taiex, the Taiwan Stock Exchange's weighted index, ended up 281.65 points, or 1.20 percent, at 23,660.59 after moving between 23,498.40 and 23,671.84.

Turnover totaled NT$367.84 billion (US$12.19 billion), up from NT$339.60 billion Monday.

"The U.S. staged a strong rebound overnight as investors turned the weak job data into a positive lead, hoping for a rate cut by the Fed," MasterLink Securities analyst Tom Tang said.

He was referring to a 1.34 percent increase in the Dow Jones Industrial Average and a 1.95 percent rise in the tech-heavy Nasdaq index after a jobs report showing a gain of barely 100,000 jobs over the past three months in the U.S.

Tang said the rate cut optimism was also reinforced by San Francisco Federal Reserve Bank President Mary Daly's remark that she felt the time was nearing for interest rate cuts.

"(Artificial intelligence chip designer) Nvidia shares hit a new high overnight, prompted many investors here to pick up AI-related stocks, driving the Taiex to go higher today," Tang said. "Buying in large-cap tech stocks pushed up today's turnover."

iPhone assembler and AI server maker Hon Hai Precision Industry Co. rose 2.50 percent to close at NT$184.50, and Quanta Computer Inc., another AI supplier, gained 2.49 percent to end at NT$288.00.

In addition, Wistron Corp., which also rolls out AI servers, added 3.77 percent to close at NT$124.00, and LITE-ON Technology Corp., which manufactures power solutions for AI servers, soared 10 percent, the maximum daily increase, to end at NT$133.50.

Contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the most heavily weighted stock here, which makes chips for Nvidia, also rose 1.32 percent to close at NT$1,150.00, contributing about 120 points to the Taiex's rise.

Bucking the downturn, IC packaging and testing services provider ASE Technology Holding Co. ended down 0.68 percent at NT$146.50.

"With the tech sector highlighted by rotational buying, old economy and financial stocks were largely left behind," Tang said.

Given falling crude oil prices, Nan Ya Plastics Corp. lost 2.26 percent to close at NT$36.80, Formosa Plastics Corp. fell 1.06 percent to end at NT$37.45, Formosa Petrochemical Corp. dropped 1.02 percent to end at NT$39.00, and Formosa Chemicals & Fibre Corp. ended down 0.95 percent at NT$26.05.

Among property developers, Kindom Development Co. lost 1.50 percent to close at NT$42.60, and King's Town Construction Co. fell 0.83 percent to end at NT$41.85.

In the financial sector, which rose only 0.27 percent, Cathay Financial Holding Co. rose 0.48 percent to close at NT$62.80, while Fubon Financial Holding Co. ended unchanged at NT$84.00.

"While the impact of the 20 percent blanket tariff unveiled by the White House eased, investors should shift their focus to the fundamentals, with companies to report their July sales (by Aug. 10)," Tang said.

According to the Taiwan Stock Exchange, foreign institutional investors bought a net NT$11.49 billion in shares on the market Tuesday.