Bank stocks take Dubai index lower
The Dubai Financial Market General Index fell 0.3 per cent to close at 2,746.93 in Dubai on Thursday. The move follows the previous session’s increase of 0.5 per cent.
Bank stocks led the market lower, as six of nine sectors lost; 14 of 37 shares fell, while eight rose. Emaar Properties contributed the most to the decline, falling 0.9 per cent, while National Cement Company had the largest drop, falling 4.2 per cent.
Meanwhile in emerging markets Brazil’s real currency scaled 11-week peaks as the country’s central bank sounded less dovish about future rate cuts, while most other Latin American currencies inched higher against a dollar in the doldrums.
The dollar fell 0.4 per cent against a basket of six major rivals after the US Federal Reserve cut interest rates as expected and signalled additional trims are unlikely. But the lack of an explicit signal that the bank is done with easing for now was perceived to be less hawkish than expected.
“By suggesting that markets should not reprice the path of monetary policy much even if inflation were to start moving higher would suggest a more prolonged period of lower real rates, which ought to be bearish for USD,” Morgan Stanley analysts said in a note.
Colombia’s peso rose for a fourth session in five, while Brazil’s real rose as much as 0.7 per cent. Brazil’s central bank cut the benchmark interest rate to an all-time low of 5 per cent as expected on Wednesday, but signalled that further easing may be less aggressive than it has been in recent months, despite inflation running well below target.
Mexico’s peso slipped 0.2 per cent a day after data showed the economy crawled forward in the third quarter from the previous three-month period, falling short of forecasts and prolonging its tepid start under President Andres Manuel Lopez Obrador.
“The market took this data as indicating that the likelihood of a 50 basis point cut in the upcoming Banxico meeting must be increasing, as front end rates kept falling,” analysts at Citigroup said.
“But with the Fed also signaling a pause, we doubt that Banxico is currently in the mindset of a 50bp cut, even though there is a clear willingness to cut more than the Fed.”