Next few weeks will be critical for markets as stocks have made phenomenal gains against all odds, thanks to the global liquidity, and the increasing risk appetite of investors. Image Credit: AP

Dubai: With a COVID-19 vaccine use authorization from US drug regulators, a global stock rally already underway on improving market wide sentiment, was expected to continue in the weeks to come.

Investors are now more willing to take on additional investment risk, as inflow into stocks surged on the backdrop of receding pandemic-related uncertainty, banking on an imminent vaccine rollout.

However, the next few weeks will be critical to watch. The market has made phenomenal gains against all odds, thanks to the global liquidity, and the increasing risk appetite of investors.

Investors may want to cash some chips as the end to the year draws closer. With the holiday season setting in the following week onwards, this would be the last busy week for foreign investors this year. Domestic investors may have to step up purchases quite heavily to keep the momentum going.

Brexit back in focus

The upcoming week, which is the final full week of economic data for the year, sees decisions by the US Federal Reserve, Bank of England and the Bank of Japan, although little change is expected from any of them.

While UK employment, inflation and retail sales figures are due this week, given the renewed focus on Brexit, related negotiations and an imminent December 31 deadline, economic data are likely to take a back seat.

Britain is likely to complete its journey out of the European Union in three weeks without a trade deal, British Prime Minister Boris Johnson and European Commission chief Ursula von der Leyen said on Friday.

Stock markets mixed

However, last week witnessed another mixed trading session on the US stock market, closing when all the major averages posted declines and the small-cap US-weighted Russell 2000 rose higher for the sixth straight week.

On Wall Street, the Dow Jones inched up 0.16 per cent, the S&P 500 slipped 0.13 per cent, its third down day, and the Nasdaq Composite slid 0.23 per cent. The pan-European STOXX 600 index lost 0.68 per cent and MSCI’s gauge of stocks across the globe shed 0.40 per cent. The dollar index rose 0.2 per cent.

The last day of the week was marked by volatility as some investors traded on vaccine hopes, while others traded on uncertainty of ever-rising daily coronavirus cases and the US pandemic stimulus bill standoff. The Food and Drug Administration later authorised the vaccine from Pfizer and BioNTech.

UAE bourses trade mixed

While the Dubai stock market ended largely unchanged on Sunday, the Abu Dhabi bourse gained. Elsewhere in the GCC, indices largely climbed at the start of the week, led by advances in financial shares.

The benchmark in Dubai, the Dubai Financial Market (DFM), was on track to extend gains for a seventh session and ended down 0.01 per cent at 2,546.61 points on Sunday, while in Abu Dhabi, the Abu Dhabi Securities Exchange (ADX) index gained 0.6 per cent at 5140.573 points.

Dubai’s main share index was supported by a 4.2 per cent jump in DAMAC Properties, which last week said the hospitality sector has seen an increase in occupancy since the onset of the pandemic. In Abu Dhabi, gains on the index were led by a 0.9 per cent rise in the country’s largest lender First Abu Dhabi Bank and a 0.6 per cent increase in real estate giant Aldar Properties.

The region’s largest bourse - Saudi Arabia’s Tadawul - stayed more or less flat, the benchmark in Oman dipped, while the indices in Qatar, Bahrain, Kuwait and Jordan gained.