Technical indicators suggest pause in UAE rally may not break approaching resistance levels
Technical indicators suggest a recent pause in UAE markets rally may not have been strong enough to break approaching resistance levels.
Abu Dhabi's benchmark gained 0.6 percent to 3,489 points on Tuesday, extending gains to head back towards last week's 54-month peak.
"The market index pulled back 1.96 percent recently before finding support at 3,415 and it is trying to sustain a rally from there," says Bruce Powers, a technical analyst and corporate advisor at Orpheus Capital.
"The most recent peak of 3,569 points is within a potential long-term resistance zone and its therefore likely to have trouble going much higher without a retracement or consolidation firm." A similar situation exists on Dubai's index, he adds.
Telecom operator Etisalat said it has secured shareholder approval for the financing package to back its bid for Vivendi's 53 percent stake in Maroc Telecom.
Etisalat is vying with its regional rival, Qatar-backed Ooredoo, for control of the biggest fixed and mobile operator in the kingdom of Morocco.
In Dubai, shares in Drake & Scull will be in focus after it won a 158 million dirhams contract from builder Arabtec. The contract will cover all mechanical electrical and plumbing works for St. Regis Hotel and Residences in Amman.
Elsewhere, Morgan Stanley cut Ooredoo price target to 150 riyals from 154 riyals but has an 'overweight' rating on the stock.
Ooredoo slipped 0.4 percent to 120 riyals on Tuesday, and its up 15.4 percent year-to-date. Doha's benchmark rose 8.5 percent so far in 2013.
Upbeat global markets may spur local investor sentiment.
Brent crude futures steadied above $104 per barrel on Wednesday, as upbeat U.S. housing and consumer confidence data sparked expectations of improved demand from the world's top consumer.
Asian shares and the Australian dollar eased on Wednesday as strong economic data rallied US stocks to record highs, throwing market focus back on to the possibility of reduced Federal Reserve monetary stimulus in the future.