Dubai: As hopes of a palpable COVID-19 vaccine improved, investors were seen eying more concrete signs of an economic rebound globally, even as stock markets steadily resumed amassing weekly gains.
Stimulus measures, cheaper oil prices, vaccine hopes and rosier-than-usual corporate prospects have been giving equity bulls all the reasons to march on, even as new coronavirus infections soar in some parts of the world and try to create a barrier on their path.
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The S&P 500 logged another strong week last week on Wall Street, nearly returning to its pre-pandemic all-time highs. Coronavirus vaccines were once again a catalyst for the market last week.
Benchmarks see cautious trading
A slowdown in retail sales growth in the US last month and concern over consumer spending weighed on stocks, with the main indexes mixed, though not far from record highs.
At the end of last week, the Dow Jones edged up 0.11 per cent, the S&P 500 inched up 0.04 per cent and the Nasdaq slipped 0.3 per cent. MSCI’s world index, which shed 0.22 per cent, had rallied close to 50 per cent from March’s slump despite the rampant pandemic.
The retail sales figures suggest the recovery has continued to grind on even in the face of the resurgence in virus cases, analysts at Capital Economics wrote in a note.
Uneven global economic growth
Investors will get key updates on the US economic recovery when the Federal Reserve releases its most recent meeting minutes on Wednesday and the National Association of Realtors publishes its July existing home sales data on Friday.
The euro zone reported the biggest drop it ever recorded in employment in the second quarter. Data also confirmed a record fall in gross domestic product last quarter and a widening in the euro zone’s trade surplus with the rest of the world.
Data showing a slower-than-expected rise in Chinese industrial production and a surprise fall in retail sales put Asian shares on the defensive. MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.2 per cent.
Positives on vaccine front
On the COVID-19 vaccine front, Russian President Vladimir Putin said Russia has registered the world’s first coronavirus vaccine and the US government announced a deal with Moderna to purchase 100 million doses of the company’s experimental coronavirus vaccine for $1.53 billion.
“The development of a vaccine would represent a breakthrough in the public health battle against COVID-19, but it would not necessarily transform the immediate economic outlook,” analysts at Capital Economics cautioned in a note.
The analysts further opined that risky assets will make further ground between now and the end of 2022, while being positive on the prospects for bonds in the euro-zone periphery.
Worry of delay in US stimulus
Meanwhile, the battle over a second major economic stimulus package continued without resolution in the world’s largest economy, US, last week, with Democrats pushing a bill worth an estimated $3 trillion and Republicans touting a bill worth about $1 trillion.
Stocks dipped on Friday as data out of China, the euro zone and the US put a lid on expectations for a sustained global rebound, with traders already worried about a delay in US fiscal stimulus.
European shares were weighed further by a hit to travel stocks after Britain added more European countries, including France, to its quarantine list. The pan-European STOXX 600 was down 1.17 per cent, but gained for a second straight week.
The Dubai Financial Market (DFM) gained 1.3 per cent, helped by a 3 per cent gain for Emirates NBD Bank and a 0.7 per cent rise for Emaar Properties.
Meanwhile, the Abu Dhabi Securities Exchange (ADX) added 0.6 per cent, helped by a 1.1 per cent rise in First Abu Dhabi Bank, the country’s largest lender, and a 0.8 per cent gain for Abu Dhabi Islamic Bank.
Union Properties closed down 0.9 per cent, after rising 1.8 per cent earlier in the day, in a volatile day of trading. The real estate developer reported a lower second-quarter loss to Dh38.6 million from Dh84.1 million a year earlier. DXB Entertainment dropped 0.8 per cent after second-quarter losses widened to Dh258 million from Dh233 million a year earlier.
On ADX, Dana Gas retreated 1.4 per cent after the energy firm earlier posted a first-half loss of Dh69 million, which included an impairment charge relating to its oil and gas assets in Egypt.
Elsewhere in the GCC, Saudi Arabia’s benchmark index – the largest in the region – was up 0.3 per cent as retail firm Savola Group advanced 1.6 per cent on a sharp rise in second-quarter profit.