Taiwan stocks break through the 17,000 barrier! With Fed rate cut expectations + tech stocks leading the way, a new wave of investment opportunities is taking shape

Market Review and Background Analysis

As US economic data weakens, reinforcing the Federal Reserve’s rate cut expectations, global investors’ risk appetite has significantly increased. The Taiwan stock market opened strongly today (26th), rising by 151 points to 27,063, successfully breaking the “17,000” barrier, symbolizing that the Taiwan stock market has entered a new valuation range. The driving forces behind this rally stem from the combined effects of three factors: expectations of a policy shift by the Federal Reserve, signals of a recovery in the tech industry, and international funds reallocating into emerging markets.

Federal Reserve Rate Cut Expectations as a Market Catalyst

The US November Consumer Confidence Index plummeted to 88.7, the largest decline in nearly seven months. Additionally, September retail sales increased by only 0.2% month-over-month, well below expectations. These data points signal a slowdown in economic growth, significantly boosting market expectations that the Federal Reserve will initiate a rate cut cycle next year. Reports indicate that White House Economic Advisor Haskett is considered a strong candidate to become the next Federal Reserve Chair. If appointed, markets anticipate a substantial rate cut cycle next year, further lowering the 10-year US Treasury yield below 4%, hitting recent lows.

This shift in policy expectations has accelerated international capital flows into risk assets, strengthening support for the stock market.

Structural Opportunities Amid Tech Stock Divergence

Although NVIDIA, a leader in AI chips, fell nearly 3% due to news of supply agreements with Google and Meta, this actually reflects increased competition in the AI chip market and diversification of supply chains. The US stock market was supported by healthcare and consumer stocks, with the five major tech giants all closing higher—Meta up 3.78%, Alphabet up 1.53%—indicating market confidence in the long-term growth momentum of tech stocks.

Related supply chain companies in Taiwan benefited accordingly. TSMC opened with a jump of NT$15, Hon Hai, and Delta Electronics also hit new highs. These blue-chip stocks, representing high-quality listed companies with over 8% dividend yield for ten consecutive years, become more attractive in a rate cut environment, making them key targets for capital allocation.

Technical and Capital Support Double Up

From an international market perspective, the S&P 500 index has risen for three consecutive days, forming a clear V-shaped reversal, successfully breaking through the critical resistance at 6,770 points. If the index can hold above 6,680 points, it may further challenge the resistance at 6,870. The Taiwan stock market follows the global bullish trend, with foreign buying clearly warming up, the New Taiwan dollar strengthening, and market liquidity abundant—conditions conducive to a continued upward trend in the short term.

All four major US stock indices closed higher, with the Dow Jones rising over 660 points. The Nasdaq and S&P 500 also advanced, while the Philadelphia Semiconductor Index closed slightly higher. Taiwan ADRs showed mixed performance: TSMC ADR remained flat, UMC ADR retreated, but Chunghwa Telecom and Nanya Technology ADRs rose slightly, indicating that capital still favors tech stocks with growth potential.

Small and Mid-Cap Stocks Initiate Rotation

Notably, the OTC index surged past 254 points at the open, reflecting a clear shift of funds into small- and mid-cap stocks with thematic potential. AI server concept stocks, high-speed transmission solutions, and green energy sectors have become new highlights of this rally, showing a natural rotation from blue chips to thematic stocks in the Taiwan market.

Market Outlook and Risk Warnings

Although current market sentiment is optimistic, several key risks should be closely monitored: the final confirmation of Federal Reserve personnel appointments, subsequent changes in US retail data, and whether tech giants like NVIDIA can sustain competitive pressures.

If the Fed signals a clearer path toward rate cuts, global stock liquidity could further expand, providing opportunities for Taiwan stocks to challenge previous highs. Additionally, if Taiwan’s index can hold above 26,800 points with moderate trading volume, it would support the continuation of a bullish trend.

Summary

Driven by expectations of a policy shift by the Federal Reserve, Taiwan stocks have entered a new wave of gains. Investors may consider following capital rotation into trends such as AI, electric vehicles, and green energy, while continuously monitoring Fed developments and international economic data to seize year-end profit-taking opportunities.