Trump tariffs: Did UAE, Saudi stock investors shrug off new deadline and threats?

Dubai: Stock market investors in the UAE and Saudi Arabia seem to be shrugging off the latest extension of the US trade tariff deadline to August 1, with DFM and ADX down 0.45% and 0.06% by 1pm. As for the Saudi Tadawul, the decline is an equally marginal 0.09%.

It was last evening that the US announced it will be giving key trade partners with time until August 1 to hammer out some sort of trade deal. The earlier US cut-off date was July 9. But in announcing the extension, the US did take aim at Japan and South Korea that if a deal isn’t done by August, their tariff burden on exports to the US would be 25% (rather than 24% that was mentioned earlier).

None of the dilly-dally on the US tariff threats seem to matter much with stock markets, either in the UAE or their Asian peers. (In India, investor anticipation about some sort of trade arrangement with the US is building, which has extended onto the Sensex vibes.)

In fact, the DFM is coming off solid gains over the course of recent trading sessions, and some of the price drops today were more in the nature of some profit taking, say market analysts.

“Everyone was betting on the US extending the deadline beyond July 9,” said an analyst. “Even after the US announced the extension yesterday, the US markets weren’t down by much. So, it’s more a shrug than anything when it comes to UAE and Saudi investors.”

On DFM, the stocks to decline included the two Emaar ones and DIB, all three by over 1%. There were gains for Drake & Scull, which has just announced its move into property development. On ADX, Aldar and Lulu retail saw price trims, while IHC and ADIB made gains.

Across major Asian markets, the signals are flashing green, with Hang Seng up a healthy 1.09% (260 points) and the Nikkei by 0.26% (101 points). In India, the Sensex eked out a 0.05% increase (41.78 points) and Shanghai by 0.7% (24 points).

"If Nikkei and Asian markets are not too concerned about latest US tariff tirades, why should others?," queries another analyst. "Even Trump's direct targeting of trade with BRICS hasn't stirred up investors."

According to Milan Vaishnav, founder of ChartWizard.ae, "We cannot outright say Indian markets are discounting the tariff deadline. The reason of the markets consolidating at higher levels is the relative resilience of the Indian market as compared to the peers.

"Secondly, isolated sectors are seeing tracking. For example, textile tariffs on Bangladesh and Vietnam are translating into gains in the sector in India.

"By and large, the markets are consolidating, and any knee-jerk reaction, if at all it comes, will be short-lived and will act as a 'buy' opportunity for good stocks at lower levels."