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The main bourse in Dubai and Abu Dhabi were seen rising on Wednesday, as UAE markets resumed trading after a three-day closure on account of Eid Al Fitr.Image Credit: Gulf News

UAE markets open higher as trading resumes post-Eid

DFM investors cheer move to further resume economic activity in Dubai post-lockdown

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Dubai: The main bourse in Dubai and Abu Dhabi were seen rising on Wednesday, as both UAE markets resumed trading after a being shut for three days on account of Eid Al Fitr celebrations.

Dubai Financial Market (DFM) index ended up 2.35 per cent to trade at 1,984 points, while Abu Dhabi Securities Exchange (ADX) settled up 0.5 per cent at 4,133 points, after gaining as much as 1.1 per cent in early trade.

What drove the market higher?

The ease in virus-rattled sentiment was supported by optimism surrounding the gradual reopening of Dubai economy, received widely as news of progress over the extended weekend that marked the end of the month of Ramadan.

Dubai called for the responsible reopening of shopping malls, retail outlets, leisure and entertainment centers and some other sectors from Wednesday. Emaar Malls rose 5.7 per cent as a result, making it one among the top gains on the DFM.

Other Emaar-related names too supported the gains on the Dubai market, with Emaar Properties up 5.7 per cent and Emaar Development up 2.6 per cent. Among other gainers was Dubai Islamic Bank, which rose 2.9 per cent.

Subdued trading in days ahead

"For the regional markets, trading activity is likely to remain subdued due to the Eid holiday shortened week," wrote Iyad Abu Hweij, managing director at Allied Investment Partners. "The recovery in oil prices should be encouraging for the region in the short-term."

Real estate developer Union Properties recorded heavy trade on Tuesday, with 105 million shares having changed hands. The stock settled down 1.6 per cent after rising as much as 5 per cent at the start of the trading session.

The volatile trade came after Union Properties said in a statement that one of its units launched an arbitration claim for about Dh1.5 billion it was owed - a claim relating to a 10-year-old construction project.

Unrest over Hong Kong protests limit to Asian markets
While Asia-focused investors feared another mass protest unravelling in Hong Kong, global markets largely shrugged it off and focused instead on the gradual reopening of economies post-lockdowns.

As more economies proceeded to gradually reopen after pandemic-induced slowdowns, a minor rally was seen in most markets worldwide, but analysts saw a pullback in risk-on sentiment as relations between the world’s top two economies – US and China – grew strained over Hong Kong.

“The possibility of US sanctions on Chinese officials in retaliation to the Hong Kong security law has reminded the market how precarious US-China relations are right now, so risk is pulling back slightly,” explained Rony Nehme, Chief Market Analyst at Squared Financial.

“There is also risk of Hong Kong losing its special trading status for trade with the US.”

Benchmarks in Shanghai and Hong Kong retreated after the White House said a proposed national security law might jeopardize the Chinese territory’s status as a global financial center.

Mounting US-China tensions bodes ominous for the global economy amid pandemic fragilities, analysts at Mizuho Bank wrote in a report.

Overnight, Wall Street closed at its highest level in nearly three months, resuming trading after halting trading for a day due to Memorial Day. This was largely attributed to better-than-expected economic data released in the US on Tuesday.

New home sales rising slightly in April as low mortgage rates appeared to offset concerns about the impact of the coronavirus and consumer confidence also a little higher in May than in April, noted analysts at Emirates NBD.

“The data helped boost equities, with markets seemingly shrugging off increasing geopolitical tension between the US and China for now,” Emirates NBD analysts added.