Equity Markets To See Increased Volatility on The Back of a Potential 2nd Wave

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CORONAVIRUS IMPACT

Global equities rebounded during the week on the back of support from the Central Banks and better than expected economic data. US retail sales rose by 18% in May 2020, the biggest monthly increase on record, which boosted investor confidence indicating that the economy might recover faster than earlier estimates. 

Having said that, investors remained concerned about a second wave of new cases, which could be a potential setback for the markets. Oil prices surged by 8.93% during the week as investors cheered the stance of OPEC+ to maintain supply cuts amid subdued demand. 

For the MENA region, the equity markets performed positively with 4 out of the 7 regional indices closing in green while 3 closed in red. Abu Dhabi was the best performing index regionally with gains of 1.17%, followed by 0.63% in Saudi Arabia, and 0.24% in Egypt. On the other hand, Kuwait was down 1.32%, followed by a fall of 1.18% in Dubai, and 0.47% in Bahrain. 

Going forward, equity markets are likely to witness increased volatility on the back of a potential second wave and its impact on broader economies. However, the Central Banks going all out to provide liquidity and stability to the financial markets will continue to boost investor confidence and drive capital markets in the coming weeks. 

For the MENA region, the recovery in oil prices is certainly encouraging for the markets but investors might continue to maintain the ‘wait and watch’ strategy to start buying into the current uncertain environment. Nevertheless, investors could look to buy into quality stocks with solid business model to navigate through the uncertainty.

Indexes   Last WTD (%) MTD (%) YTD (%)
Dubai (DFMGI) 2,078.38 -1.18% 6.85% -24.83%
Abu Dhabi (ADSMI) 4,345.28 1.17% 4.92% -14.39%
Saudi (SASEIDX) 7,355.66 0.63% 1.98% -12.32%
Kuwait (KWSE) 4,186.12 -1.32% 0.86% -14.75%
Egypt (EGX30) 10,857.87 0.24% 6.24% -22.23%
Bahrain (BHSEIDX) 1,274.30 -0.47% 0.37% -20.86%
Oman (MSM30) 3,515.76 0.06% -0.81% -11.69%
Commodities    Value WTD (%) MTD (%) YTD (%)
Gold (s/OZ) 1743.61 0.74% 0.89% 14.94%
Silver ($/Oz) 17.62 0.74% -1.37% -1.18%
WTI ($/bbl) 39.43 7.85% 11.64% -35.42%
Natural Gas 1.67 -4.57% -9.24% -23.71%
OPEC Oil ($/bl) 42.19 8.93% 11.50% -36.08%
Copper ($/MT) 5865.56 1.36% 9.72% -5.39%
Aluminium ($/MT) 1603.81 0.65% 4.35% -12.00%

 

FX Rates   Value WTD (%) MTD (%) YTD (%)
USD/AED 3.6732 0.00% 0.01% 0.01%
USD/SAR 3.7518 -0.05% -0.11% 0.03%
USD/EGP 16.18 -0.00% 2.13% 1.13%
USD/EUR 0.8947 0.70% -0.66% 0.34%
USD/JPY 106.89 -0.44% -0.87% -1.58%

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