Modi lost his majority in parliamentary elections held between April and June and had to depend on fickle allies to form a government
asia4 hours ago
Led by Dubai, the global stock markets staged a smart recovery on Tuesday after two days of losses as investors monitor tensions between the US and Iran following the killing of Iranian general by the US last week.
For the UAE markets, gains were mostly led by real estate, banking, investment and financial services and real estate sector stocks while the US and European markets noticed strong demand for technology and aviation equities. Gains currently are being supported by a slight recovery in global risk sentiment on back of improving global PMI's and China's expansionary fiscal stance.
Dubai Financial Market jumped nearly two per cent, led by blue-chip stocks Mashreq, Shuaa Capital, Emaar Properties and Emirates NBD. Mashreq bank jumped 13.8 per cent while Shuaa gained 4.7 per cent and Emaar rose 3.5 per cent.
Abu Dhabi Securities Exchange also jumped early one per cent on Tuesday, led by 12.5 per cent gain in Taqa, 11.9 per cent rise in Al Qudra and 10.8 per cent surge in Bildco shares.
Among other regional indices, Saudi Arabia's Tadawul index ended flat after trading in the positive territory for most of the day. Blue-chip Aramco shares continued their downward trend, falling 0.43 per cent to SR34.35 - hitting its lowest level again since last month's market debut.
Boursa Kuwait jumped 1.3 per cent to close at 6,808; Bahrain Bourse gained half a per cent to 1,592 points; while Qatar Stock Exchange rose 1.18 per cent to 10,408 points on Tuesday. Muscat Securities Market ended nearly flat at 3,948.
Vijay Valecha, chief investment officer, Century Financial, said global and Gulf markets are looking relatively cheap on the back of consecutive selling sessions.
"Markets are currently breathing a temporary sigh of relief even as lot of uncertainty is building up with regards to the Iran's actual retaliatory stance. Going ahead, outlook is likely to be range bound to bearish as overall outlook remains choppy. Fears of earnings getting impacted owing to the actual US - Iran war is the number one threat that stocks particularly in this part of the region face," Valecha said.
As the geopolitical tension is simmering down in the region with new major retaliation from Iran after the killing of Iran's Major-General Qassem Soleimani, investors believe that tension is unlikely to escalate into a full-blown war between the US and Iran despite rhetoric from the two countries' leaders. Moody's Investors Service assumes that the US and Iran will avoid an outright military conflict.
Valecha said markets are yet to discount a scenario where the ongoing verbal spat between US the and Iran turns into actual armed conflict.
Technically, major Gulf indices including the DFM General Index and the Saudi Tadawul index are near the 50 per cent retracement of their last years gains, he said, adding that any sharp fall back below 2019 lows is likely going to fuel further pessimism across the markets.
Globally, stocks stabilised as well with most of the Asian and European markets staying higher.
In Asia, Tokyo ended 1.6 per cent up, Hong Kong added 0.3 per cent and Shanghai rose 0.7 per cent.
"Markets were in a happier mood on Tuesday as it looked like investors' fears had subsided over an escalation of tensions between the US and Iran," said Russ Mould, investment director at stockbroker AJ Bell.
"Stocks in Europe and Asia rallied, with supermarkets, tobacco and airlines among the sectors in demand on the London market."
Observers said the limited impact on markets was also because the standoff was not expected to have a massive impact on global growth.
"Putting to one side the heat and noise of the events of the last few days, and in the absence of further violence and escalations, the reality is that very little has changed," said CMC Market analyst Michael Hewson.
But analysts warned that the mood could change in a split second, with Donald Trump warning of a major retaliation if Iran carries out any revenge attacks.
"It's wait-and-see mode here," said Steve Chiavarone, at Federated Investors. "How much, if at all, do things escalate with Iran and does it ultimately impact the global economic outlook? Right now, not so much. Could it change? Sure."
In Europe, Germany's DAX advanced 0.8 per cent to 13,231 points while the CAC 40 in France climbed 0.3 per cent to 6,033. Britain's FTSE 100 edged 0.2 per cent higher to 7,589.
Among currencies, the US dollar drifted off to 96.752 against a basket of currencies, but stayed well above a recent six-month trough of 96.355.
Marija Veitmane, a senior strategist at State Street, said she sticks to her expectation of a slight improvement in economic and earnings outlook.
"The world is well stocked with oil and can stomach short disruptions, while large U.S. shale production should soften its impact," said Veitmane, brushing aside worries that an oil price spike would dent global growth.
The euro and sterling were trading slightly lower ahead of this week's vote in Britain's parliament on Prime Minister Boris Johnson's European Union withdrawal deal.
Bitcoin, the world's biggest cryptocurrency, broke above $8,000 overnight and is up 13 per cent since the US drone attack in Iraq last week. Though it is not seen as a safe-haven asset given its wild swings, the surge has coincided with the equities sell off.
"Geopolitical risk has always felt much worse for markets in the heat of the moment than it does in hindsight, but it's always possible that the next one will bring us into a different era," said Jim Reid, strategist at Deutsche Bank.
"Markets got a lift from the lack of follow-through (after the air strike) as yesterday progressed, and by the end of the session had actually staged a reasonable recovery," Reid added.
- waheedabbas@khaleejtimes.com
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