Global, UAE markets brace for a week of quiet month-end trading

Dubai: As global markets enter a week of quiet month-end trading, analysts view event risk to be relatively light with participants left to tackle some of the lingering issues driving investor sentiment.

The vital concern remains the tentative and perhaps sputtering recovery for the global economy, as hopes for an imminent recovery took another little hit last week after weaker-than-expected economic data in several key parts of the world.

Mixed data out of US, Europe

Data out of the US and Europe pointed to a possibly slower rebound, and virus outbreaks in Europe led to governments re-imposing tougher travel restrictions within the continent.

A steep rise in jobless claims and the US Federal Reserve minutes suggested the economy was beginning to stall a little bit. However, upbeat August readings on US home sales and business activity was welcomed even as new COVID-19 cases remain stubbornly high across the US.

The loss of momentum came after fresh numbers painted a muted economic outlook, with purchasing managers’ index releases from France and Germany as well as the wider euro zone falling short of expectations, flagging slowing momentum in the recovery.

US stocks gain; Europe, Asia slips

The US stock market defied concerns about the global economy last week, as well as a week of declines in European and Asian equities, to crack fresh record highs. Among global shares, MSCI’s benchmark for global equity markets was off its lows, up 0.17 per cent on Friday.

While the recovery from March’s bear-market lows has been generally cheered as the fastest in history, market participants carry doubt into the new trading week about its underlying strength.

The US stock market’s gains are increasingly being driven by a narrow set of mega-cap tech-stocks, with Tesla’s surge above $2000 per share, and Apple Inc’s climb to a $2 trillion valuation last week stoking fears US tech shares are approaching bubble-like territory.

UAE bourses rebounds big 

Regionally, the Dubai and Abu Dhabi stock markets were closed for a public holiday in observance of the Islamic New Year.

Both the indices have been making big strides in rebound gains the past few weeks, after cautiousness had gripped investors in the days and months before. However, with the end of the month approaching, gains are expected to be largely capped this week.

The Dubai Financial Market (DFM) rose 2.4 per cent last week, largely rising through the week before ending down 0.5 per cent on Friday. Meanwhile, the Abu Dhabi Securities Exchange (ADX) too rose 2.9 per cent last week, rising for all the five sessions last week.

Both the Dubai and Abu Dhabi bourses have been tracking sentiments seen in markets worldwide. Trading on the UAE benchmarks have turned much confident the past weeks, just like the global stock markets, and the existing trend is seen continuing in the days to come.

Investor confidence builds in the UAE

After dropping about 4 per cent in the month of May, the DFM rose 6 per cent in the month of June but slipped 0.5 per cent in July. Similarly, the ADX slipped 2 per cent in May and rose 3.5 per cent in June but slipped 0.2 per cent in July.

Amassing bigger gains in August, the DFM gained 8.9 per cent in the current month so far, whereas the ADX gained 6.5 per cent.

Elsewhere the Saudi Arabia stock market rose in early trade on Sunday, led by gains in financial shares. The Saudi benchmark index firmed by 0.5 per cent, with National Commercial Bank rising 1 per cent and Saudi British Bank advancing 2.6 per cent.