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Taiwan’s stock market opened under tremendous pressure on Monday, after US President Donald Trump’s nomination for the position of Federal Reserve chair. The nominee is Kevin Warsh, who is seen has having a more hawkish stance. In addition, sharp declines in US stocks and gold and silver prices delivered a blow to the market. Taiwan shares plunged by as much as 703 points during the trading session on Monday. Ultimately the market closed down 439.72, or 1.37% to stay above the monthly moving average at 31,393 points.
Winson Wang
Analyst
Since January, Taiwan shares have gained more than 3,000 points, so after such a strong short-term rally, a pullback was brewing. With the Lunar New Year break coming up next week, selling pressure ahead of the holiday has emerged earlier than usual. The market had already fallen for two days last week, and today marks the third consecutive drop. The market would typically see a rebound after three days of sharp drops. If the rebound is weak, it would indicate that selling pressure has not yet been fully absorbed. I think the market will slowly stabilize three to five days before the break.
Not even comments from the godfather of AI, Jensen Huang managed to halt the downturn. At a high-profile banquet, the Nvidia CEO praised TSMC as the sole pillar of AI. But on Monday, TSMC shares shed NT$10 to close at NT$1,765. Other industry heavyweights such as Hon Hai, Quanta, Delta Electronics and MediaTek also ended the day with losses. As the Lunar New Year break draws closer, selling pressure remains a driving force in the market. Analysts say that further volatility is on the horizon until the selling pressure gets fully digested.
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