Major U.S. stock indexes closed lower amid hawkish signals from a US Federal Reserve official that dampened hopes of smaller rate hikes after US inflation slowed in October. However, Warren Buffett's Berkshire Hathaway Inc. bought more than US$4.1 billion of stock in TSMC for the first time, causing Taiwan stocks to rise in early trading on the 15th. The TAIEX rose nearly 390 points, breaking through the 14,500-point level. TSMC's stock price once reached NT$487, a surge of NT$42. The New Taiwan Dollar also rose against the US Dollar, close to a two month high.
Although the U.S. stock market was closed on Monday, Warren Buffett's Berkshire Hathaway Inc. bought TSMC's ADRs for the first time. This caused Taiwanese stocks to jump higher in early trading on the 15th, with the TAIEX rising by as much as 390 points during the session and breaking the 14,500 level. TSMC's share price also increased to NT$487, a surge of NT$42.
Wang Jung-hsu, Stock Analyst: “Funds are too concentrated in TSMC, causing other stocks not to have much financial support. So today is actually a performance of individual stocks, with prices being reorganized. After all, the U.S. stock market has actually risen for several days in a row. There was also profit-taking selling pressure yesterday.”
U.S. inflation has cooled down and the U.S. dollar index has fallen for several days, driving hot money back to Asia. The Taiwan dollar rose against the U.S. dollar again on the 15th, appreciating nearly 1 cent during the session closing in on the NT$31 level, a two-month high. Federal Reserve Vice Chairperson Lael Brainard revealed that the central bank may soon slow down the pace of interest rate hikes. However, Fed board member Chris Waller believes the market has overreacted to the softer-than-expected October consumer price inflation data, and the central bank needs to continue tightening its monetary policy. This hawkish comment also drove the Dollar Index to rebound from its lows. Domestic analysts believe that although the current Federal Funds Rate has reached the level of 3.75 percent to 4 percent, the real interest rate compared to inflation is still negative. Therefore, they believe that the continuous increase of U.S. interest rates may be necessary, but the rate of increase may slow.
Chiu Ta-sheng, Researcher, International Affairs Dept., TIER: “The U.S. job market may deteriorate when demand, including private investment, and private consumption are affected. That is when the Fed will consider adjusting its monetary policy. ”
Analysts point out U.S. consumption power will be weakened under high inflation and continuous interest rate hikes, forcing the U.S. economy into a downturn. If the U.S. does not stop raising interest rates, it will affect Taiwan's economics and domestic investments, with the country's GDP growth rate possibly falling below 3 percent.