Taiwan's stock market opened sharply lower, breaking below the 48,000 mark, with TSMC and memory shares leading the decline — bad news for short-term investors.

• Strong US manufacturing data for September and a poorly received Treasury auction fuelled market concerns that the Federal Reserve could raise rates again, sending the 10-year US Treasury yield to a 16-year high.
• With rates spiking, tech stocks bore the brunt: all four major US indices closed in the red, with the Philadelphia Semiconductor Index falling the most, dragging Taiwan stocks down the next day.
• TSMC fell, while memory shares including Nanya Technology, Winbond, Macronix and Phison all dropped between 2% and 3% or more; MediaTek and Delta Electronics bucked the trend to close higher.
• Only a day earlier, Taiwan stocks had hit a record high on heavy foreign buying, and the speed of the shift in funds points to intensifying volatility at elevated levels.
• With the Mid-Autumn Festival holiday approaching, some pre-holiday profit-taking is inevitable, but data from the past 10 years show a high probability of positive returns from after the holiday into the fourth-quarter tech peak season.

Outlook: Volatility may continue around the holiday in the near term, but as long as US Treasury yields stabilise, the fourth-quarter tech peak season still has a chance of supporting the market.