^NDX Today: December 30 — China-Taiwan Drills Rattle Big Tech
China Taiwan military drills are back in focus as the PLA runs live‑fire exercises that simulate a blockade after a US$11 billion arms sale approval. Activity has tightened around sea and air routes near Taiwan’s ports. The Nasdaq‑100 (^NDX) slipped 0.33% to 25,558, with a day range of 25,465 to 25,561. For Canadians with US tech exposure through ETFs, the risk is twofold: potential chip supply delays and a hit to sentiment if tensions stay elevated.
Supply Chain Impact: What Matters Now
PLA maneuvers concentrated near key approaches to Taiwan’s ports and airspace, with missiles flying closer than prior drills. That raises near-term shipping insurance costs and rerouting risk, even without a formal closure. The second day focused on tightening encirclement patterns, signaling credible blockade capability, according to reporting by The Star (source). For Canada, longer transit times can lift import prices for electronics.
Taiwan blockade drills threaten chip logistics that power US mega-cap tech. Many Canadians hold Nasdaq-100 ETFs, so any fab or shipping delay can pressure margins and delivery schedules. The ^NDX trades near 25,558, with a 52‑week range of 16,542 to 26,182 and a YTD gain of 22.10%. China Taiwan military drills that persist into January could weigh on guidance for hardware-heavy names.
Market Reaction and Technical Setup
The ^NDX is down 0.33% to 25,558, after a 25,561 high and 25,465 low. It sits above its 50‑day average of 25,292 and well over the 200‑day at 22,832.85, keeping the medium‑term uptrend intact. Bollinger bands center on 25,437, with resistance near 26,006. Average True Range at 333 suggests wider swings if China Taiwan military drills intensify headlines.
RSI at 56.76 is neutral, while ADX at 12.29 signals a weak trend. MACD is positive (79.50 vs 49.57 signal), and Stochastics at 82.96 hint at short‑term overbought conditions. With the Keltner upper band near 26,030, rallies can fade quickly on fresh geopolitical shocks. We watch closes above 25,560 for strength and below 24,869 for stress.
Policy Watch: Signals From Washington and Beijing
A US Taiwan arms sale totaling US$11 billion preceded the latest exercises. Missiles flew closer than prior events and flight paths pressed key corridors, increasing miscalculation risk. China Taiwan military drills are intended to test a rapid encirclement scenario. For Canadian investors, extended drills could prompt export controls or targeted sanctions, which tend to hit semis and related equipment firms first.
Donald Trump said he is “not worried,” downplaying market risks even as drills continued around Taiwan’s air and sea lanes (source). Such remarks can steady sentiment short term, but policy actions matter more. If rhetoric cools while patrols persist, volatility may ebb. If escorts or interceptions rise, we would expect quick spikes in hedging costs and tech weakness.
Final Thoughts
We see three practical steps for Canadian investors while China Taiwan military drills continue. First, review US tech allocations in RRSPs and TFSAs, especially unhedged Nasdaq ETFs, since CAD moves can mask or magnify returns. Second, track chip supply checkpoints: foundry output, packaging hubs, and shipping lanes. Any warnings on lead times can hit earnings multiples fast. Third, use levels: above 25,560 keeps the ^NDX constructive; a break toward the lower Bollinger band near 24,869 would signal rising stress. Sentiment can flip on headlines, so keep a cash buffer, avoid leverage, and prioritize companies with strong inventories, diversified suppliers, and clear contingency plans.
FAQs
They raise risks to semiconductor supply chains that power US mega-cap tech, a big part of many Canadian portfolios through Nasdaq ETFs. Even without conflict, rerouting and insurance hikes can lift costs and dent margins, pressuring earnings and valuations in the near term.
Yes. Simulated encirclement near ports and airspace increases the odds of shipping delays, higher insurance, and precautionary inventory builds. That affects hardware timelines, data center deployments, and consumer electronics, with pass-through effects on margins for Nasdaq constituents and Canadian import prices.
It can calm sentiment briefly, but it does not change operational risks. If drills persist or escalate, hedging costs and volatility typically rise. Markets will weigh actual policy steps and any change in military posture more than rhetoric, especially around core shipping corridors.
A large US Taiwan arms sale can trigger more exercises and closer patrols, raising miscalculation risk. Investors should watch for export controls, sanctions talk, or guidance cuts from chip-linked firms. Those policy actions often move prices faster than speeches or headlines.
Disclaimer:
The content shared by Meyka AI PTY LTD is solely for research and informational purposes. Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.
