Oil Prices Recovery Expected to Impact Positively Domestic Markets

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CORONAVIRUS IMPACT

Global equities recorded one of their best weekly gains in two months, largely driven by stimulus measures and a surprise gain in US payrolls during May. The European Central Bank’s (ECB) decision to boost its emergency bond purchases by another USD 600 billion also supported the markets, especially the European markets. 

Investors are encouraged by positive new developments, indicating that economic recovery is moving in the right direction. Oil prices also surged during the week, rising by 11.79% on the back of positive news flow and indications that demand might be recovering quicker than earlier estimates. 

For the region, performance during the week was positive, catching up with the global sentiments after investors returned from Eid Holidays. For the week, 5 out of the 7 regional indexes closed in green while Bahrain and Oman were the only two indexes to close in red with losses of 0.21% and 0.09%, respectively. Egypt was the best performing index regionally with gains of 5.06%, followed by 4.46% in Abu Dhabi, 3.98% in Dubai, and 2.23% in Saudi Arabia. 

While there are still significant uncertainties over the COVID-19 impact on corporate earnings, investors are encouraged by the reopening of economies that is likely to lead to a rebound in profitability later this year. Given the uncertainties, it might be an opportune time for investors to rebalance their portfolio to maintain an appropriate mix that are aligned with new realities. 

For the region, the recovery in oil prices and further extension of record production cuts by OPEC+ until the end of July will have a positive impact on domestic markets. Furthermore, the positive sentiments in global markets and increased liquidity will support in pushing the regional markets higher over the next couple of weeks.

Indexes   Last WTD (%) MTD (%) YTD (%)
Dubai (DFMGI) 2,039.48 3.98% 4.85% -26.24%
Abu Dhabi (ADSMI) 4,303.14 4.46% 3.90% -15.22%
Saudi (SASEIDX) 7,207.78 2.23% -0.07% -14.08%
Kuwait (KWSE) 4,162.78 0.13% 0.30% -15.23%
Egypt (EGX30) 10,621.14 5.06% 3.92% -23.93%
Bahrain (BHSEIDX) 1,273.34 -0.21% 0.29% -20.92%
Oman (MSM30) 3,517.60 -0.09% -0.76% -11.64%
Commodities    Value WTD (%) MTD (%) YTD (%)
Gold (s/OZ) 1685.83 -2.46% -2.46% 11.13%
Silver ($/Oz) 17.43 -2.45% -2.45% -2.25%
WTI ($/bbl) 38.97 10.33% 10.33% -36.18%
Natural Gas 1.8 -2.17% -2.17% -17.77%
OPEC Oil ($/bl) 42.3 11.79% 11.79% -35.91%
Copper ($/MT) 5584.4 4.46% 4.46% -9.93%
Aluminium ($/MT) 1572.08 2.29% 2.29% -13.74%
FX Rates   Value WTD (%) MTD (%) YTD (%)
USD/AED 3.6732 0.01% 0.01% 0.01%
USD/SAR 3.755 -0.02% -0.02% 0.11%
USD/EGP 16.2375 2.49% 2.49% 1.48%
USD/EUR 0.886 -1.62% -1.62% -0.64%
USD/JPY 109.59 1.63% 1.63% 0.90%

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