Dubai: Equity markets in the United States are likely to consolidate near its record high in a truncated holiday week, encouraged by signs of the strength in the world’s biggest economy, triggering positive investor sentiment across the world.

Higher crude prices, which has been driving the volatility recently, may help equity markets to rally elsewhere.

The Dow Jones Industrial Average reached a record high of 18,103.45 on Friday, before closing 0.13 per cent at 18,053.71. The S & P500 index hit a peak of 2,092.70, before closing 0.33 per cent higher at 2,088.77.

“United States may consolidate at current levels at record highs. If I’m holding stock in the US market, why should I sell as I’m getting all positive indicators from data points that are coming out. I don’t see any reason to sell,” Pradeep Unni, senior relationship manager, Richcomm Global Services told Gulf News.

“Even we have minimal outstanding positions in the market and prefer to be on the sidelines before we start afresh in the year,” Unni said.

Key indices in the United States may hit another peak.

“I still see Dow Jones hitting new targets at around resistance area of 18,478 in the next few weeks and S & P may hit resistance area of 2,127,” said Osama Al Ashri, member of British organisation, Society of Technical Analysts.

US GDP surged by 5 per cent in the third quarter, expanding at the fastest pace since the same period of 2003, as US consumers and businesses spent more than previously estimated. Falling oil and natural gas prices helped bolster expectations for stronger consumer spending heading into next year.

Positive crude oil

Crude oil, which ended 1.31 per cent lower on Friday, may edge higher next week.

“Market will react to problems from supplies in Libya and prevailing cold season demand in the UK and US and its impact on heating oil demand, and its positive impact on prices,” said Richcomm’s Unni.

Brent and West Texas Intermediate extended their annual declines of more than 40 per cent on Friday, the biggest since 2008, as the Organisation of Petroleum Exporting Countries resisted supply cuts to defend market share while the highest US production in three decades exacerbated a global glut.

“At this stage, crude oil prices can rally 20 per cent from the lows without changing the negative outlook,” said Ole S Hansen, head of commodities strategy at Saxo Bank.

Year-end rally

This may trigger follow-up rally in Europe, Asia and rest of the world.

“The rally seen in US markets last week, may get reflected in Asian markets and elsewhere this week,” Unni said.

On Wednesday, the Australia Securities Exchange S & P200 ended 0.25 per cent higher at 5,394.50, while Shanghai Composite Index ended 2.77 per cent higher at 3,157.60. India’s S & P BSE Sensex Index ended 0.12 per cent higher on Friday.

However, liquidity would be lower as most of the investors are expected to be away on year-end holidays. Markets are shut on Thursday, but open for trading on Friday.

“Being a truncated week no one would be interested in initiating new positions in the week. Even the liquidity on markets would be dull,” said Unni, adding, “activity in market would start only after January 5.”