Taiwan share prices are expected to continue consolidating ahead of the US Federal Reserve's policy-making meeting scheduled for September 18, dealers said. Market sentiment remains cautious as investors keep a close eye on whether the Fed will adjust its monetary policy amid the subprime mortgage problems, and for any Fed comments on the US economy, they said.
Many investors, in particular foreign institutional traders, prefer to stay on the sidelines as the ruling Democratic Progressive Party is pushing for entry into the United Nations under the name of Taiwan, which has raised tensions across the Taiwan Strait, they added.
It is possible for the market to test 9,000 points again on economic and political uncertainty, while there may be technical support at around 8,800 points, dealers said.
For the week to September 14, the weighted index closed up 13.55 points or 0.15 percent at 9,031.63 after a 0.40 percent increase a week earlier. Average daily turnover stood at 120.93 billion Taiwan dollars (3.65 billion US), compared with 136.65 billion dollars a week ago.
"Interest from foreign investors has been retreating to cap daily trading volume. The market is quiet and I expect it will continue to be so next week," Yuanta Core Pacific Capital Management analyst Calvin Chen said.
Chen said movements on Wall Street are expected to further dictate the local market.
"Investors are worried about a possible Fed move to cut its key interest rates by a larger scale than expected, hinting the US economy is worse than expected," he said.
Taiwan International Securities analyst Eric Lee said while the weighted index is likely to fall below 9,000 points on interest rate concerns, companies embracing close business ties with China may benefit from the mainland's galloping economy and serve as a safe haven for investors at the moment.