Russia-Ukraine conflict: Oil is closing in on $120/barrel and that will please UAE, Gulf investors
In Asia, investors seem reassured by Fed chief Powell's take on rate hike
Dubai: Oil prices are inching closer to $120 a barrel as markets fixate on whether there will be enough supply coming to feed demand. That, however, did not prevent nearly all the major Asian stock markets starting positive after yesterday’s heavy declines, with India’s Sensex up by nearly 100 points by 9.30am UAE time.
The Shanghai index did slip into the red, albeit marginally by 4 points.
“The gains on the stock markets have more to do with the US Federal Reserve saying they will hike interest rates this month – but, maybe, not as much as they had planned,” said Vijay Valecha, Chief Investment Officer at Century Financial. (The Fed will meet mid-month to sign off on the first rate hike for some time now, with inflationary pressures becoming the biggest worry.)
The DFM started out positive in the initial trading (up by 0.89 per cent as of 12.26pm), while ADX slipped marginally at the start but is now trending 0.611 per cent up. UAE and Gulf stock markets are likely to remain in positive territory as investors keep looking at oil prices - and what they see is giving them a lot of cheer.
The Saudi index slipped into negative on Wednesday, but most market watchers reckon this to be a blip. By noon, the Tadawul is 0.57 per cent higher at 12,726 points.
"Nevertheless, the main driver for financial markets is now the geopolitical tensions and the conflict in Ukraine. Asian markets because of their geolocation and relatively neutral position in respect of the conflict have less of a risk profile as compared to the US and, especially, the European markets.
More IPOs
The UAE and Saudi stock markets are awaiting their next round of IPOs, with DEWA and Salik likely to be the first out of the gates. Multiple market analysts say that those IPO plans will remain on track and will unlikely be distracted overtly by the situation in Ukraine.
“If not IPOs, there is always the SPAC route as Shuaa showed with its latest listing,” said an analyst. (A SPAC – or special purpose acquisition company – achieves the same stock market listing that an IPO would do, but without many of the attendant processes.)
Keep hopes up?
The Russia-Ukraine conflict keeps playing out, with reports coming more frequently on the rising cost in terms of fatalities. The two sides are still in talks to try and work a solution that will end the hostilities.
“There is mild hope that talks between the Ukrainian and Russian delegates can make some headway - but I wouldn't go as far as to say there's optimism,” said Craig Erlam, Senior Market Analyst at Oanda. “The gulf between the demands of the two countries is enormous.”