UAE equities could face fresh selling pressure
The UAE stock markets may come under increased selling pressure as fears that the European debt crisis is taking a turn for the worse triggered a selloff across European and Asian markets yesterday. The DFM index closed down 0.33 per cent at 1,478.84 yesterday. The ADX general index fell 0.37 per cent to 2603.06.
“The UAE markets are making a sideways move and the overall trend ranges from negative to neutral. If there’s a selloff on the international markets, the UAE markets which are already weak will be affected,” Mousa Haddad, Head Trader with National Bank of Abu Dhabi Asset Management said. “The markets could make new lows. While 1,450 is a critical support level for the Dubai market, for Abu Dhabi it’s 2,550. Any drop below these levels is going to trigger more downsides,” he added.
Global markets were spooked last week by a weak employment data in the US, signalling the economic recovery in the world’s largest economy was flagging. Investors are betting the Federal Reserve will announce a third round of quantitative easing later this month.
Goldman Sachs and Citigroup also see the Bank of England restarting bond purchases as early as this week as the economic recovery weakens and bank- funding costs increase. “Our markets have dropped but haven’t quite been as volatile as the international markets. The risk of a significant downside in the UAE markets is limited barring any major international macro shock,” said Anastasios Dalgiannakis, Head of Trading at Mubasher Financial Services. “At this stage, the downside risks feel manageable.”
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