Dubai: As new infections surged in various parts of the world over the weekend, markets will be pressured this week, snuffing any hope among investors of a quick rebound post lockdowns.
A renewed spike in virus cases in several parts of North and South America, Australia, Japan and India have prompted analysts to caution of an even further slowdown in economic recoveries.
Global markets have up until now been trying to regain its footing, and largely managed to do so, as stocks mostly ended up last week and the weeks before.
This was partly on the back of positive macroeconomic data coming out of Germany and China, which renewed optimism for most financial markets and investors alike.
Rallying also as sentiment eased after economies reopened after months of lockdown in various cities around the world, the gains are expected to be cut short this week as a sharp surge in COVID-19 cases has once again become a cause for worry.
North and South America have seen a sharp spike in cases, with the region on Saturday reporting a record number of new cases. Several cities in the US are seeing a record number of cases and some cities in India have extended their lockdown over the weekend.
India is now widely expected to cross Russia and emerge as the nation with the third largest reported infections around the world, after recording a record number of infections on Saturday. In Russia, however, new cases have dropped for a third week in a row.
Despite the daily coronavirus case count topping 50,000 for the first time in the US, stock have been on an upward trajectory, as has been the trend the past few weeks.
This has further reinforced the reality that financial markets are detached from the pandemic headlines and are trading on positive developments surrounding the vaccine. The successful first stage human trial of a vaccine from US-German Pfizer and BioNTech boosted sentiments.
The Dubai Financial Market (DFM) ended flat at 2,062 points, while the Abu Dhabi Securities Exchange (ADX) edged down 0.1 per cent at 4,303 points.
“The region has underperformed the global equities during the first half of the year, which can be attributed to uncertainty around the oil prices and production cuts, coupled with domestic factors influencing investor confidence,” said Iyad Abu Hweij, managing director at Allied Investment Partners.
“For the MENA region, the reopening of economies is likely to provide a better assessment of the real impact, which will allow investors to differentiate the winners and losers from the COVID-19 pandemic.”
Elsewhere in the Gulf states, Saudi Arabia’s benchmark index gained 0.6 per cent, while most other key indices had a day of quiet trading.