Global Bullish Backdrop Supports Taiwan's Wednesday Upside, But Profit-Taking Looms

The Taiwan Stock Exchange has delivered four consecutive sessions of impressive gains, with the index accumulating nearly 1,900 points—a 6.3 percent surge that pushed it to a fresh record closing level just above 30,575 points. While this momentum is undeniable, traders should remain cautious on Wednesday as the market may face profit-taking headwinds after such a strong rally.

U.S. Market Strength Fuels Regional Optimism

Wall Street’s robust Tuesday performance provided the foundational support for Asian bourses looking ahead to Wednesday. The Dow Jones Industrial Average surged 484.90 points (0.99 percent) to close at a record 49,462.08, while the NASDAQ climbed 151.35 points (0.65 percent) to settle at 23,547.17, and the S&P 500 gained 42.77 points (0.62 percent) to finish at 6,944.82, also marking a new all-time high. The broad market advance was anchored by Amazon’s announcement regarding its Alexa+ Early Access rollout, positioning the tech giant to compete more directly with ChatGPT and Gemini. This positive backdrop continues to translate into positive quotes across Asian equity markets.

Taiwan’s Tech and Industrial Strength Offset Financial Weakness

On Tuesday, the Taiwan Stock Exchange Index jumped 471.26 points or 1.57 percent to reach 30,576.30 intraday, exhibiting the expected strength from its heavyweight technology and plastics sectors. Among semiconductor leaders, Taiwan Semiconductor Manufacturing Company surged 2.10 percent, while United Microelectronics Corporation expanded 1.44 percent and MediaTek declined 2.62 percent. Novatek Microelectronics demonstrated particular strength, soaring 4.13 percent, alongside Largan Precision’s 1.58 percent gain.

The industrial sector proved resilient, with Delta Electronics vaulting 3.96 percent and the plastics complex showing notable enthusiasm—Nan Ya Plastics surged 5.94 percent and Formosa Plastics added 0.53 percent. However, Asia Cement tumbled 1.98 percent, suggesting some pockets of weakness within the broader materials complex.

The financial sector painted a mixed picture. While Mega Financial collected 0.62 percent and First Financial improved 0.67 percent, Fubon Financial sank 0.82 percent, Cathay Financial lost 0.65 percent, and E Sun Financial fell 0.44 percent. CTBC Financial remained unchanged on the day.

Caution Warranted as Profit-Taking Could Emerge Wednesday

Despite the positive backdrop from Western markets and continued strength in Asia’s bourses, investors should prepare for potential profit-taking on Wednesday. After achieving a record closing and accumulating such substantial gains over four sessions, market participants may elect to lock in their gains. The technical setup, while bullish, suggests consolidation could occur following this explosive move higher.

Economic Calendar Ahead: Inflation Data and Fed Implications

Taiwan will release December consumer price data on Wednesday, building on November’s figures which showed 0.09 percent monthly and 1.23 percent year-over-year inflation. Meanwhile, U.S. traders remain focused on the upcoming Labor Department jobs report scheduled for Friday, which carries significant implications for the Federal Reserve’s interest rate trajectory ahead of their late-month monetary policy decision. Crude oil markets retreated on Tuesday, with West Texas Intermediate February futures declining $1.11 or 1.90 percent to $57.21 per barrel, reflecting profit-taking amid analysis of Saturday’s military operation’s potential oil supply impact.