Can Taiwan's Stock Market Stop the Bleeding? What Traders Should Watch

The Taiwan stock market faces a critical juncture as it attempts to stop a three-session decline that has erased nearly 1,200 points, representing a 3.7 percent loss. The Taiwan Stock Exchange now hovers just above the 31,620-point level, with traders looking to Tuesday’s session for potential stabilization signals. Yet mixed global conditions suggest the path forward remains uncertain for equity investors navigating this volatile landscape.

Three Straight Declines Test Market Resilience

The latest trading session delivered another blow to the market, with the TSE index closing significantly in the red at 31,624.03 after dropping 439.72 points or 1.37 percent. The decline spanned a broad range of sectors, with financial shares, technology stocks, and plastics companies leading the selloff. Financial heavyweight stocks including First Financial (down 0.52%), Fubon Financial (off 0.44%), and E Sun Financial (lower 0.30%) all retreated, while the technology-heavy segment suffered more pronounced losses.

Among the semiconductor and electronics players, Taiwan Semiconductor Manufacturing Company shed 0.56 percent, Hon Hai Precision and United Microelectronics Corporation both stumbled 2.72 percent, and MediaTek plunged 3.13 percent. The plastics sector proved particularly vulnerable, with Formosa Plastics collapsing 6.34 percent and Nan Ya Plastics cratering 6.98 percent. This across-the-board weakness reflects a loss of confidence that extends well beyond any single industry segment.

Global Signals Send Conflicting Messages

Wall Street’s strong performance offers a glimmer of hope for Tuesday’s market recovery. The major U.S. averages surged higher, with the Dow jumping 515.19 points or 1.05 percent to finish at 49,407.66, while the NASDAQ added 130.29 points or 0.56 percent to reach 23,592.11 and the S&P 500 gained 37.41 points or 0.54 percent to close at 6,976.44. This upbeat lead from American exchanges typically provides positive momentum for Asian bourses to follow.

The strength on Wall Street was underpinned by unexpected expansion in U.S. manufacturing activity for the first time in 12 months, according to data from the Institute for Supply Management. Additionally, President Donald Trump announced a new trade deal with India, which initially encouraged equity investors. However, traders appeared somewhat cautious, reluctant to commit significant capital ahead of the closely watched Labor Department jobs report scheduled for Friday.

Oil Price Declines Offer Mixed Benefits

Crude oil prices experienced a notable pullback on Monday, with West Texas Intermediate crude for March delivery dropping $3.28 or 5.03 percent to $61.93 per barrel. The decline reflects de-escalation in U.S.-Iran tensions and reduced concerns over Middle Eastern supply disruptions. While lower energy costs could theoretically benefit Taiwan’s manufacturing sector, the market has yet to price in this potential relief as risk sentiment remains fragile.

Outlook: Will the Market Find Its Footing?

Tuesday’s session will be critical in determining whether the Taiwan stock market can reverse course and stop further deterioration. The combination of positive U.S. economic data, solid Wall Street performance, and declining energy costs provides a foundation for potential recovery. Yet the breadth of Monday’s selloff across multiple sectors suggests underlying concerns that extend beyond any single catalyst. Traders will be watching for stabilization signals and any indication that institutional buyers are willing to re-enter the market after the recent pullback.