Dubai: With yet another year winding down, so have market-related catalytic events. For the next couple of weeks investors largely expect to witness lesser than usual trading, which is a year-end norm.
The next two weeks see scattered data releases, and while the China PMIs will be worth watching analysts say it is likely that most news will pass unnoticed.
While at present there are no major corporate releases expected over the next two weeks, analysts say to watch out for any progress on US fiscal stimulus talks.
US stimulus progress slows
President Donald Trump on Friday signed into law a two-day extension of existing federal funds passed by Washington to avoid a midnight government shutdown, as lawmakers negotiate a $900 billion pandemic aid bill and as part of $1.4 trillion government spending package.
Although stimulus never materialized, vaccine news continued to be positive. The US stock markets chugged along with the S&P 500 ending the week up 1.3 per cent. A similar rallying trend was seen by markets elsewhere.
Further improvement in US industrial output in October and the Federal Reserve’s decision to keep interest rates unchanged till restoring full employment and hitting the 2 per cent inflation target, also aided sentiment.
Yet another Brexit deadline
If anything is going to dominate attention for stock markets this week, it will be the ongoing Brexit spectacle, which now enters its final two weeks before the looming December 31 crucial deadline.
The European Parliament has set today, December 20, as the current deadline for the UK and EU to finish negotiating a trade deal. This deadline may be extended, and similar deadlines have been extended before, but it’s getting perilously close to the crucial December 31 deadline.
After that day, the UK will leave the post-Brexit transition period (during which it operates in the EU single market), deal or no deal. That means each day negotiations drag on implies a higher possibility of a no-deal Brexit, which market spectators widely weigh as an economic disaster.
Most GCC, UAE markets rise
Stock markets in Dubai and several other oil-dependent markets in the Gulf inched higher at the start of the week, a day after the OPEC+ group resolved to avoid delays when making changes to the oil market.
The Dubai Financial Market (DFM) edged up 0.35 per cent to 2,559 points, while the Abu Dhabi Securities Exchange (ADX) dipped 0.4 per cent to 5,113 points.
Elsewhere in the GCC, while the largest benchmark in Saudi Arabia – the Tadawul – too gained 0.3 per cent, gauges in Qatar, Bahrain and Jordan rose between 0.2 per cent and 1.1 per cent. However, the indices in Oman and Kuwait slipped slightly.
Stock markets were largely supported by positive sentiment surrounding OPEC+ deciding to take a more hands-on approach with the oil market by starting regular monthly meetings. More frequent conferences mean policy makers in oil-producing countries will drive the market, not speculators.
The volume of shares traded in all markets was below the 30-day average ahead of the holiday season. While the DFM and the ADX indices dropped 7 per cent and gained 1.1 per cent, respectively, in the year so far, the Tadawul All Share Index is up just over 4 per cent in 2020.
Gulf markets had witnessed a crude price slump since the start of the pandemic, but have been recovering amid optimism that vaccine rollouts will provide a long-awaited boost to oil demand.