Dubai: Global stock markets took a breather on Wednesday, as economic data out of virus-stricken China and its neighbours helped ease rattled sentiments.
Asian stocks, which stole the global limelight the last few days with steep declines, were on a recovery path similar to US and European markets. China’s Shanghai index rose 1.3 per cent, building on Tuesday’s modest rebound. But the index has still not recovered from its heavy losses Monday, when it plunged nearly 8 per cent and recorded its worst single-day performance since 2015.
Japan’s Nikkei too advanced 1 per cent, with Hong Kong’s Hang Seng Index up 0.3 per cent, while South Korea’s Kospi moved up 0.4 per cent. On Wall Street, the stock rally is expected to continue as Dow futures jumped nearly 300 points.
Asian resilience
A flood of data released showed somewhat promising signs for major economies in Asia, amid worries that a dent to the world’s second largest economy will hurt growth worldwide.
Private survey data released showed that while China’s services sector grew in January, it did so at a slower pace than the month before. The Caixin services purchasing managers index registered at 51.8 in January, down from December’s 52.5. A reading above 50 indicates growth from the previous month.
The data is still “impressive,” since it covers the initial outbreak of the virus and the mass shutdowns in China over the Lunar New Year, according to Jeffrey Halley, senior market analyst for Asia Pacific at Oanda, while also indicating that economic data out of Japan and Singapore were also positive.
“Altogether, this morning’s January data implies that Asia is showing a degree of unexpected resilience,” Halley added, though he refrained from predicting when the outbreak may reach its peak.
Lingering concerns
Several companies that have been affected by the coronavirus outbreak also made gains Wednesday, though there are still concerns about how the virus could impact business in the long term, particularly as several airlines halted flights to the region.
The death toll from the monthlong coronavirus outbreak has continued to climb, nearing 500 with 25,000 confirmed cases in China. New cases surged by double-digit percentages in the past 11 days, with no sign of a slowdown. Many Chinese provinces are extending their shutdowns to February 10.
“Uncertainty is growing that factories will not reopen next week and that could be the catalyst for risk aversion to return,” Halley added.
There were media reports, however, that UK scientists have made significant progress in a vaccine for the virus. Chinese researchers have applied for a local patent on an experimental Gilead drug that they believe might fight the pathogen.
Lacklustre UAE trade
The top index in Dubai managed to eke out last-minute gains on Wednesday, after trading in the red throughout most of the session.
The Dubai Financial Market (DFM) index edged up 0.1 per cent at 2,771 points, while the Abu Dhabi Securities Exchange (ADX) slipped 0.2 per cent to 5,080.
As gains among banking majors were pulled back after declines in real estate stocks, the major UAE indices traded mixed, even as merger talks supported gains in Taqa and Tabreed stocks.
Dubai’s index slipped with as blue-chip developer Emaar Properties shedding 0.75 per cent. Meanwhile, Shares in National Central Cooling Co (Tabreed) were up 3 per cent, after reports that Tabreed was is in advanced talks to buy Emaar Properties’ district cooling business.
Abu Dhabi National Energy Company (Taqa) surged 14.9 per cent, extending gains for a third day after news that Abu Dhabi Power Corporation was considering taking control of the energy company in an asset swap deal.
