Markets Update: Trading in the UAE tracks global markets as United States faces $600bn of spending cuts and tax increases.
Abu Dhabi and Dubai stocks dip as US edges towards fiscal cliff
UAE stocks dipped lower in early trading on Thursday, tracking global markets as investors turned their attention back to the United States and its looming fiscal cliff after President Obama secured a second term in office.
"It's a real test for local stocks today after the big drop in global markets," said Nabil al Rantisi, the managing director of brokerage at Mena Corp, an investment company in Abu Dhabi.
In the US, the Dow Jones Industrial Average dropped 2.3 per cent to 12932.70 late night on Wednesday, while the Standard & Poor's 500 Index fell 2.3 per cent to 1394.53.
Asian markets followed suit this morning, with Japan's Nikkei Index down 1.5 per cent to 8833.99 and Hong Kong's Hang Seng Index down 1.5 per cent to 21,768.40 points.
In a looming budget crisis in the US, a fiscal cliff of nearly $600 billion in spending cuts and tax increases is due in January. Political leaders have promised to try to avoid the cuts, which threaten to push the US back into recession.
"President Obama removes one uncertainty that has been weighing on the markets over the last few months," Julian Jessop, the chief global economist at Capital Economics said in a note to clients.
"With Congress still split, President Obama will struggle to garner bipartisan support for a more comprehensive agreement that addresses the longer term issue of how to put the nation's finances back on a sustainable path."
Dana Gas, the gas explorer and producer, fell 4.6 per cent to 41 fils.