Dubai: UAE indices, like its global market peers, were seen trading higher on Wednesday, seemingly disregarding widespread concerns over the coronavirus outbreak and a slump in oil prices.
Dubai Financial Market (DFM) rose 2 per cent to 1,862 points, while Abu Dhabi Securities Exchange (ADX) rose 3.2 per cent to 3,987 points. The gains on both the indices were largely mirroring those seen in markets elsewhere.
“Equity markets stabilised slightly despite the on-going turmoil on the oil market,” wrote Milan Cutkovic, market analyst at AxiCorp. “Positive developments in the fight against the coronavirus and new economic stimulus measures have led to renewed optimism.”
Shares of Emirates Integrated Telecommunications Company, also known as du, slipped marginally, and was the lone percentage decliner on the DFM. The telecom giant had reported a 21 per cent year-on-year decrease in its first-quarter net profit.
Elsewhere, the pan-European Stoxx 600 climbed 1 per cent, while most markets in Asia also traded higher.
Wall Street benchmarks too was indicating a higher open. The US Congress, on Tuesday, further agreed on another package worth almost $500 billion.
“Other countries are likely to follow with further measures to minimize the economic damage caused by the pandemic,” Cutkovic added. “On the other hand, the oil price crash was also a reality check for investors, as it highlights the current state of the global economy.”
The rally came despite sharp losses in the oil markets overnight, with international Brent crude futures plunging 13.76 per cent to $16.67 a barrel, having declined from levels above $24 a barrel on Tuesday.
Meanwhile, the June contract for West Texas Intermediate (WTI) declined further as it dropped 5.96 per cent to $10.88 a barrel, after falling more than 40 per cent on Tuesday. US crude prices have seen sharp losses in recent days due to a slump in demand and oversupply amid the coronavirus outbreak.
“The risk of being caught wrong-footed for investors anticipating a quick recovery remains high and further turbulence can also be expected on the oil market itself,” Cutkovic cautioned.
“It could take a long time before demand stabilises to some extent, and OPEC is currently quite powerless.”
Corporate earnings have also begun to take center stage in driving individual share price action. Pharmaceutical and telecom stocks were seen doing well in several markets, helped by a stronger set of first-quarter results being posted in the backdrop of a pandemic limiting physical contact and causing fatal symptoms.