FX.co ★ Rebound Anticipated For Taiwan Stock Market

Ahead of the Dragon Boat Festival holiday on Monday, Taiwan's stock market experienced a minor setback, halting a two-day rally that had seen it gain nearly 550 points or approximately 2.7%. The Taiwan Stock Exchange (TSE) now sits marginally above the 21,850-point threshold, with potential for an uptick when trading resumes on Tuesday.

The global outlook for Asian markets remains relatively stable, with a slight positive bias expected ahead of the Federal Open Market Committee (FOMC) statement on Wednesday. While European markets closed lower and U.S. markets showed gains, the consensus is that Asian markets may see slight increases.

On Friday, the TSE closed modestly down amid mixed results from technology stocks and gains in the financial sector. Specifically, the index fell by 44.32 points or 0.20%, settling at 21,858.38 after fluctuating between 21,823.62 and 21,920.85 throughout the day.

Among active stocks, Cathay Financial improved by 1.22%, Mega Financial saw a modest increase of 0.13%, CTBC Financial advanced 0.95%, and First Financial climbed 1.09%. Fubon Financial collected a 1.06% gain, E Sun Financial rose by 0.35%, while Taiwan Semiconductor Manufacturing Company (TSMC) dipped 1.68%, and United Microelectronics Corporation (UMC) jumped by 1.66%. Other notable performances included Largan Precision’s 1.05% decline and MediaTek’s 1.16% slip. Formosa Plastics added 0.48%, Nan Ya Plastics gained 0.79%, Asia Cement surged 1.97%, and Taiwan Cement increased by 1.07%. Meanwhile, China Steel advanced by 0.85% with Hon Hai Precision, Delta Electronics, and Novatek Microelectronics remaining unchanged.

Wall Street's lead on Monday suggests mild gains, as major averages opened lower but gradually moved into positive territory. The Dow Jones Industrial Average gained 69.05 points or 0.18% to close at 38,868.04. The NASDAQ Composite added 51.90 points or 0.35%, finishing at 17,192.53, while the S&P 500 rose by 13.80 points or 0.26% to end the session at 5,360.79.

Traders exhibited reluctance to make significant moves ahead of key events scheduled for later in the week, including the Federal Reserve's monetary policy meeting. The Fed is expected to keep interest rates unchanged, but market participants will closely scrutinize Fed officials' economic and rate projections.

Additionally, before the Fed's announcement, the Labor Department is set to release its report on consumer price inflation for May.

In the commodities market, crude oil prices surged on Monday amid optimism regarding energy demand. West Texas Intermediate (WTI) crude oil futures for July saw a significant increase, rising by $2.21 or about 2.9% to settle at $77.74 per barrel.