Traders at Dubai Financial Market (DFM)
Traders at Dubai Financial Market (DFM). DFM index dropped 7.5 per cent or 185 points to 2,275.54, while the Abu Dhabi Securities Exchange (ADX) fell 5.4 per cent to 4,391.22 points on Sunday morning. Image Credit: Virendra Saklani/Gulf News Archives

Dubai: Indices on both the UAE bourses continued to post declines on Sunday, amid escalating panic over the rapid spread of a pandemic worldwide and its aftereffects on the economy.

“At the moment uncertainty in markets is paramount,” said Edward Bell, commodity analyst at Emirates NBD. “We don’t think the dust has entirely settled yet.”

The Dubai Financial Market (DFM) index dropped 3.38 per cent or 68 points to 1,963.26, while the Abu Dhabi Securities Exchange (ADX) fell 1.8 per cent to 3,849.25 points. However, compared to last week selling was seen slowing on Sunday.

More travel restrictions

“Travel restrictions imposed by countries are now not a matter of if but when and who’s next,” Bell added.

Another risk weighing on region wide sentiment was the price of crude, given that oil markets collapsed last week under the weight of the Saudi-Russia price war. Even as both Brent and WTI contracts recorded their largest weekly decline since the global financial crisis, prices rebounded slightly on Friday.

At the end of the week Brent futures closed at $33.85 a-barrel, down 25 per cent, while WTI fell to $31.73 a barrel, a drop of 23 per cent.

Oil price risk to continue

“Indeed as global travel comes as close to an abrupt halt as is seemingly possible and major economies hit the pause button the impact on oil demand going forward will most likely be worse than the IEA’s (International Energy Agency) recent downside risk projections.”

Elsewhere in the GCC, the benchmark in Qatar rose about 1 per cent and Oman’s top MSM30 index edged up 0.4 per cent - making the two faring comparatively better than its peers in the province on Sunday.

Others in the region continued to drop with the region’s largest bourse – Saudi Arabia’s Tadawul – shedding 0.6 per cent and the top index in Bahrain falling 1.5 per cent. Among top percentage losers, the benchmark in Jordan dropped 4.7 per cent and Kuwait’s Premier Market Index sank 6.5 per cent.

Lockdowns fuel more selling

The US has announced a state of emergency, France and Spain have imposed lockdowns to try and control the spread of the virus and several additional countries have imposed border closures.

The UAE, along with the Gulf Cooperation Council (GCC) – a group of six Arab states reliant on oil revenues and hit by the drop in crude prices, have reported about 900 virus cases.

The emirates, which has reported 85 coronavirus infections but no deaths, and other Gulf Arab states are intensifying measures to halt the virus as the number of cases rises. Saudi Arabia and Kuwait have taken the most drastic steps, cancelling all international flights.