TAIEX rises on hopes of Fed rate cut

Local shares on Friday finished higher after getting a boost from rising hopes that the US Federal Reserve would cut interest rates in the near future, dealers said.

Buying focused on the bellwether electronics sector, led by contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which gave a better-than-expected sales forecast for the third quarter, while old economy and financial stocks appeared mixed, they said.

The TAIEX on Friday ended up 73.91 points, or 0.68 percent, at 10,873.19, after moving between 10,861.99 and 10,919.96, on turnover of NT$122.57 billion (US$3.95 billion). That was a 0.5 percent increase from a close of 10,824.35 on July 12.

The market opened up 0.58 percent as investors rushed to buy large-cap electronics stocks in reaction to a strong recovery overnight on the Dow Jones Industrial Average, which ended up 3.12 points after rebounding from an earlier 151.06-point decline, dealers said.

The Dow bounced back after New York Federal Reserve President John Williams said that the Fed should “act quickly” at a time when the economy was slowing, a clear appeal to lower interest rates.

He pointed to studies suggesting that when there are few stimulus options available, officials should “move more quickly than you otherwise might” rather than waiting “for disaster to unfold.”

TSMC, the most heavily weighted stock in Taiwan, led the early gains and even pushed the weighted index above 10,900 points, before some investors pulled back, limiting the day’s gains, dealers said.

“Since Williams is one of the voting members on the Federal Open Market Committee, his comments have strengthened market hopes that the Fed will lower its key interest rates at the end of this month, say, by 0.5 percentage points,” Hua Nan Securities Co (華南永昌證券) analyst Kevin Su (蘇俊宏) said.

The Fed has scheduled a policymaking meeting for July

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