x Abu Dhabi, UAEWednesday 26 July 2017

Global equities see sell-off over debt worries

Market Wrap: Local markets slump as political gridlock in the US unsettles investors worldwide, though Dana Gas is one bright spot on Abu Dhabi's bourse.

Worries about the stand-off in Washington over the US debt ceiling prompted a sell-off of global equities, while analysts pondered what effect anaemic trading on local markets would have on the UAE’s only listed bourse.

The Dubai Financial Market General Index fell 0.09 per cent to 1,506.13, while Abu Dhabi’s measure fell 0.5 per cent to 2,627.99.

Analysts pointed to slow months ahead for local stocks and a negative outlook for the markets they trade on.

The Dubai Financial Market’s shares fell 0.87 per cent to Dh1.14 per share ahead of its release of earnings, after Goldman Sachs lowered its target price on Dubai’s stock market.

The American investment bank cited “disappointment over the MSCI emerging market review, the impact of a seasonally slow summer, a lack of near-term positive catalysts and global macroeconomic concerns”, as it reiterated its “sell” rating.

The lone bright spot on the UAE’s markets was Dana Gas, where stocks jumped their most since January 2010 as reports surfaced that the company had become a takeover target.

Vallares, the investment vehicle backed by Nat Rothschild and ex-BP boss Tony Hayward, is exploring a bid for the Sharjah-based gas company, according to media reports.

Dana’s shares rose 5.08 per cent to 62 fils per share, even as most other local stocks fell.

The sell-off came as traders on international markets speculated on the possibility that the world’s largest economy would not break the political gridlock ahead of the August 2 debt ceiling deadline.

The sell-off on world markets continued throughout the day, as the Nikkei 225 fell 1.45 per cent to 9,901.35 and London’s FTSE 100 fell 0.62 per cent to 5,820.62. [TK]

One-year credit default swaps on the US, which insure against credit events and are seen as reflecting the likelihood that a debtor will default, also rose 4.36 per cent to hit 80 basis points.