Bourse edges up in anticipation of US Fed call
September 14, 2012, 12:02 am TWN
TAIPEI -- The local bourse ended slightly higher yesterday amid cautious sentiment as the U.S. Federal Reserve was expected to wrap up a two-day meeting later in the day, dealers said.
Large cap stocks, in particular companies in the Apple supply chain, fell into consolidation mode and failed to lead the broader market to any significant gains despite the release of Apple's latest iPhone model overnight, dealers said.
The weighted index closed up 8.35 points, or 0.11 percent, at 7,578.80, after moving between 7,557.28 and 7,594.76, on turnover of NT$82.02 billion.
The market opened up 0.09 percent as investors took cues from a lackluster performance on Wall Street overnight, dealers said. Many investors were waiting for a decision by the U.S. Fed, dealers added.
As the index moved closer to the 7,600-point mark, profit taking emerged to cap the gains, and shares were traded in reduced turnover throughout the session, they said.
"The latest Wall Street performance was not at all encouraging and prompted many investors here to take a break from yesterday's rally," Concord Securities analyst Kerry Huang said.
Huang said Wednesday's strong gains in the local bourse came from high hopes that the U.S. central bank would launch further liquidity easing, in particular a third round of quantitative easing (QE3), to boost the economy.
"But, I suspect the Fed will not decide on QE3 as recent data showed a slight improvement in the U.S. economy," Huang said. "The local bourse may pull back if the Fed disappoints the market."
Huang said, however, even if the market makes a pullback on disappointing news from the Fed, the index is likely to find strong technical support around 7,500 points.
"If the market falls below 7,500 points, good buying opportunities may emerge for investors to take advantage of low valuations," he said.
At the end of the session, the foodstuff sector scored the highest gains among the eight major sectors of the market, finishing up 0.5 percent. Cement stocks rose 0.3 percent, and the plastics and chemical, textile and financial sectors closed up 0.1 percent.
However, paper and pulp stocks fell 0.1 percent, and construction shares lost 0.2 percent, while the machinery and electronics sector closed unchanged.