Dubai: The UAE stock markets further extended its mid-week rally on Wednesday amid hints of a post-pandemic economic rebound and continued recovery in oil prices.
Dubai Financial Market (DFM) index gained 0.7 per cent at 1,999 points, after rising as much as 1.2 per cent in early trading.
The Abu Dhabi Securities Exchange (ADX) edged up 0.2 per cent at 4,284 points, helping it amass gains for four straight sessions.
UAE indices on track to end week strong
After the Dubai benchmark on Sunday retreated nearly a per cent from gains made post-Eid, the DFM has risen about 3 per cent since - gaining for three out of the last four sessions.
The ADX has gained 3.5 per cent since the start of the week.
Investors grew more hopeful of an economic rebound as more businesses reopened after pandemic-induced shutdowns. Data showing economic activity picking up in May supported that sentiment.
Data shows pickup in economic activity
The UAE headline Purchasing Managers’ Index (PMI), an indicator of economic health for manufacturing and service sectors, rose to 46.7 in May from 44.1 in April.
“The reading continues to signal a contraction in the UAE non-oil private sector last month, as output, new orders and employment all declined on a seasonally adjusted basis,” Emirates NBD economist Daniel Marc Richards and research head Khatija Haque, explained in a note.
May rate of decline not as steep as April
“However, the rate of decline in May was not as steep as in April as restrictions on movement were eased and some non-essential businesses were allowed to re-open last month.”
The past month has seen the rampant contagion slow in most of the global virus hotspots allowing the possibility of economies opening back-up and getting businesses back on track.
Data further showed that employment continued to fall in May, but at a slower rate than in March and April – indicating that the worst of the job layoffs may have passed.
Sentiment further aided by oil price rise
Further aiding sentiment was oil prices gaining on news that Saudi Arabia and Russia were close to inking a two-month extension of the current oil production cuts, pushing the deal to September 1.
Oil prices have come a long way since the deep dive into negative territory a month ago. Brent is now nearing $40 per barrel, a remarkable comeback after crashing below $20 per barrel weeks back.