Dubai: UAE indices were on a recovery path Tuesday, with investors seeing signs of the virus outbreak being contained in Europe and Asia and governments planning gradual steps to ease lockdown restrictions.
Dubai Financial Market (DFM) index gained 5.5 per cent (93.7 points) to 1,785, while Abu Dhabi Securities Exchange (ADX) rose 5.5 per cent to 3,928 points. Regional markets mirrored stocks elsewhere, which have been rising on optimism that the outbreak could be stalling in certain global hotspots.
“The world has finally seen a glimpse of light at the end of this dark tunnel,” said Hussein Sayed, chief market strategist at FXTM. “The outbreak is starting to level off across many countries and cities.”
Wall Street rallies
US stocks led the easing in sentiment, having recorded a 7 per cent surge on Monday and likely in for a further rise Tuesday. (The governors of New York, Louisiana and New Jersey pointed to signs the spread may be flattening.)
Even though the US is still bracing for a surge of deaths and the New York governor said restrictions should stay in place to slow its spread, the encouraging signs were enough to launch the S&P 500 to its best day in nearly two weeks. “There are really encouraging signs that the lockdown measures are working and that life may soon be able to at least start to return to normal,” said Craig Erlam, senior market analyst at OANDA Europe.
“This is the moment investors have been waiting for, a time when they can start to put a date on normality and in some way quantify the damage.”
Following the same trajectory
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 3 per cent. In Asia, China’s National Health Commission (NHC) reported 32 new cases, and no deaths as of April 6 — the first time the country posted no deaths since January when it started publishing daily updates.
European shares (Euro Stoxx 600) gained 3 per cent, after putting on 3.7 per cent the previous day, after authorities in Spain and Italy looked to ease lockdowns after a steady fall in coronavirus-related fatality. Germany saw the lowest number of new cases in a week.
“Modest signs are being shown in Europe that pandemic curves are flattening,” wrote Khatija Haque, head of MENA Research at Emirates NBD.
Austria become the first country in the EU to set out a detailed timetable of phased steps to normalize life and restart its economy. Denmark followed suit. France, Belgium and Finland have set up expert task forces to look at the best ways to begin winding down some of those containment measures, while avoiding a second wave of infections that could overwhelm health services.
Battle not over yet
Sayed said at this stage, markets are repricing the worst-case scenario due to the virus outbreak, but added that it’s still too early to justify a prolonged move higher.
“It’s far too early to declare victory and we now must go through the economic wreckage and determine what can be salvaged and what the longer-term cost has been,” said Erlam. “But this was always an important first step.
“Some difficult weeks lie ahead - but the UK, US and others will be encouraged by the trends we’re starting to see across Europe.”