Rising Infection Rates May Slowdown Economic Activity

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CORONAVIRUS IMPACT

Global equity markets closed the week on a negative note as investors might have booked some profits after sharp rise in tech stocks. Nevertheless the S&P and NASDAQ continues to remain in the positive territory with YTD gains of 6.07% and 26.09%, respectively. On economic front, US employers added 1.4 million jobs in August, broadly in line with consensus estimates, and unemployment rate dropped to 8.4% from 10.2% in July 2020. 

Additionally, manufacturing data across the world continued to show signs of improvement in August but the rising infection rate in some parts of the world could slow down the pace of recovery. Oil plunged by 6.88% during the week as markets seem to be concerned about demand being impact post the end of the US summer. 

For the MENA region, the equity markets continued the positive momentum to close higher during the week. Investor were encouraged by a gradual rise in business activity, coupled with new measures to aid investment and bolster government finances such as Saudi Arabia’s move to allow FDI in its debt instruments, and the UAE’s new law aimed at boosting its real estate market. For the week, 6 out of 7 regional indexes closed in green, with Egypt closing in red with losses of 2.46%. Bahrain was the best performing index regionally with gains of 2.12%, followed by gains of 2.11% in Kuwait, 1.39% in Saudi Arabia, and 0.59% in Dubai. 

Going forward, global equities might witness increased volatility as investors will continue to take some profits off the table on the back of stretched valuations. Moreover, rising infection rates in some part of the world could lead to slowdown in economic activity, which is also likely to weigh on equity markets in the coming weeks. For the MENA region, investors will continue to be encouraged by the initiatives taken by the governments to increase investments into the region and boost confidence.

Indexes   Last WTD (%) MTD (%) YTD (%)
Dubai (DFMGI) 2,282.70 0.59% 1.67% -17.44%
Abu Dhabi (ADSMI) 4,552.20 0.38% 0.73% -10.32%
Saudi (SASEIDX) 8,045.09 1.39% 1.31% -4.10%
Kuwait (KWSE) 4,260.11 2.11% 1.80% -13.25%
Egypt (EGX30) 11,180.81 -2.46% -1.63% -19.92%
Bahrain (BHSEIDX) 1,410.20 2.12% 2.12% -12.42%
Oman (MSM30) 3,746.19 0.23% -0.68% -5.90%
Commodities    Value WTD (%) MTD (%) YTD (%)
Gold (s/OZ) 1932.6 -1.62% -1.98% 27.40%
Silver ($/Oz) 26.88 -2.22% -3.79% 50.76%
WTI ($/bbl) 41.37 -3.88% -3.39% -32.25%
Natural Gas 2.49 -8.12% -4.23% 13.75%
OPEC Oil ($/bl) 42.66 -6.88% -7.10% -35.36%
Copper ($/MT) 6626.42 -0.68% -0.68% 6.88%
Aluminium ($/MT) 1781.44 -0.14% -0.14% -2.25%
FX Rates   Value WTD (%) MTD (%) YTD (%)
USD/AED 3.673 0.00% 0.01% 0.01%
USD/SAR 3.751 0.00% 0.00% -0.01%
USD/EGP 15.76 -0.69% -0.38% -1.50%
USD/EUR 0.845 0.55% 0.84% -5.27%
USD/JPY 106.25 0.84% 0.34% -2.17%

 

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