Taiwan share prices are expected to move in a narrow range ahead of the US Federal Reserve's upcoming monetary policy meeting scheduled for October 30-31, dealers said Friday.
They said local market sentiment remains cautious on fears of a further sell-off in US stocks over a possible escalation of sub-prime mortgage problems following Wall Street's heavy losses earlier last week.
With the weighted index approaching this year's high of 9,807 points seen in late July, investors prefer to take to the sidelines, making daily trading volume insufficient to leave consolidation behind, they added.
The market is expected to move between 9,500 points and 9,800 points next week, dealers said. For the week to October 26, the weighted index closed up 19.79 points or 0.21 percent at 9,631.51 after a 1.21 percent increase a week earlier.
Average daily turnover stood at 146.57 billion Taiwan dollars (4.52 billion US), compared with 146.24 billion dollars a week ago.
"Investors had better keep alert. Few can be sure whether the storm of subprime housing loans will improve or get worse," President Securities analyst Steven Huang said. As local stocks are highly correlated with their US counterparts, Huang said, possible further volatility on Wall Street will impose impact on the Taiwan market.
"I expect a consolidation mode to dominate trade over the next few sessions," he said. However, Stanley Yeh, an analyst with Yuanta Securities Investment Consulting, said he is more upbeat.
Yeh said while trade is likely to be quiet in the first half of next week ahead of the Fed's meeting, the market is expected to revive in the second half after on hopes the Fed will cut interest rates to stimulate the US economy.
"After recent significant downside, the bellwether electronics sector has positioned itself for a rebound. With the lead of electronics, it is possible for the market to challenge the high of 9,807 points," Yeh said.