Taiwan Stocks Plunge Record Points on U.S. Rate Hike Fears; AI Trend Intact

Taiwan's stock market experienced extreme volatility on Monday, June 8, 2026, suffering its largest intraday point decline in history, with the main index plummeting nearly 2,700 points. This sharp sell-off was primarily triggered by concerns over potential interest rate hikes by the U.S. Federal Reserve, following the release of stronger-than-expected U.S. non-farm payroll data.

Su Hao-yi, General Manager of Zhongtai Fund Platform, noted that the market's significant fluctuations are not solely due to the jobs data but also a confluence of negative factors. These include disappointing earnings forecasts from chip giant Broadcom, the potential capital diversion from SpaceX's initial public offering, and substantial capital-raising plans by Alphabet and Meta Platforms for AI investments.

Su cautioned that the market faces further pressure tests this week with the release of U.S. Consumer Price Index (CPI) and Producer Price Index (PPI) data. He anticipates that if these figures exceed expectations, market volatility may continue. While the market is pricing in a potential 0.25% rate hike by the Fed in December, Su believes the new Fed Chair Jerome Powell will adopt a cautious "wait-and-see" approach, likely keeping short-term rates unchanged. He also suggests that Powell might favor quantitative tightening over rate hikes in the long term, making a significant reversal in interest rate policy unlikely.

Furthermore, Su pointed out that initial U.S. non-farm payroll figures are often subject to substantial revisions, citing data from the past three years showing cumulative downward adjustments exceeding 2 million jobs. This suggests the actual employment situation might not be as robust as initially reported, advising against excessive panic.

Looking ahead, Su acknowledged that global stock markets are in a high-level consolidation phase after recent gains. However, he stressed that the long-term growth trend for the AI industry remains intact, driven by strong global computing power demand spurred by NVIDIA. As AI applications expand into various commercial sectors, their monetization capabilities are expected to improve. Su recommends that investors maintain disciplined, regular investments through systematic plans, diversify their portfolios across markets like Singapore and Vietnam, and enhance their portfolio's resilience and long-term growth potential.