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Stock markets in the UAE slipped yesterday, but ended the week higher with a rebound in oil prices providing some support even as trades thinned heading into the new year.
Oil prices – a key catalyst for Gulf equities – were little changed on the day. Investors weighed potential supply risks tied to rising geopolitical tensions after the United States carried out airstrikes in Nigeria and stepped up economic pressure on Venezuelan oil.
In Abu Dhabi, the index ended flat on the day as losses in consumer discretionary and energy stocks offset gains across other sectors. Still, the market rose 0.7 per cent for the week, snapping a weekly losing streak. Conglomerate Alpha Dhabi Holding fell 0.5pc and Abu Dhabi Commercial Bank slid 1.5pc, while Presight AI Holding gained 1.2pc. First Abu Dhabi Bank, the UAE’s largest lender, added 0.5pc.
“Market saw limited movement today. While the rebound in oil prices this week provided temporary support, the bearish 2026 surplus narrative remains a lingering risk that could weigh on investor sentiment in the coming months”, said Joseph Dahrieh, managing principal at Tickmill.
Dubai’s benchmark index shed 0.1pc, pressured by declines in financial and consumer discretionary shares, even as it logged its fifth consecutive weekly gain. Dubai Islamic Bank eased 0.8pc, while low-cost carrier Air Arabia fell 1.7pc.
Meanwhile, Major US stock indexes traded near record peaks yesterday in muted post-Christmas trading, while expectations of Federal Reserve interest rate cuts helped propel precious metals prices to all-time highs.
Public holidays kept markets closed in Australia, Hong Kong and most of Europe, but the bourses that were open pushed towards ending the year in positive territory, with Asian stocks rising to multi-week highs in their trading session earlier.
The benchmark S&P 500 was 0.07pc higher in morning trading in New York, the blue-chip Dow Jones Industrial Average rose 0.03pc and the Nasdaq Composite rose 0.03pc, with all three set for double-digit yearly gains.
Megacap tech companies have driven the S&P 500 higher in 2025, and investors have been branching out to cyclical sectors including financials and materials, broadening the upswing and leaving the main US indexes set for a third straight year of gains.
Data suggesting the US economy is resilient, paired with the possibility that a new central bank chair to replace Jerome Powell could look to cut rates next year, is supporting markets.
Pressure on AI stocks stemming from concerns over high valuations and profit-sapping capital expenditures has also lessened.
Investors are preparing for 2026 focused on when the US Federal Reserve might further cut rates and by how much, with traders pricing in at least two cuts over the year, although they do not expect the Fed to move before June.
The central bank itself has projected one more cut next year but divisions among decision makers has left investors on edge about the US policy outlook.
Markets are also waiting for President Donald Trump to nominate a Fed chair to replace Powell, whose term ends in May. Any signal of what Trump will decide could sway markets in the coming week.
The US dollar has been under pressure as a result, pushing the euro, sterling and the Swiss franc to highs. The dollar index, which measures the US currency against six rivals, fell 0.02pc to 97.93 yesterday.
The Japanese yen softened against the dollar yesterday as investors remained on watch for potential intervention to shore up the currency. Analysts say year-end trading, when volumes are thin, provide an opportunity for authorities to take action.
The yen has weakened despite the Bank of Japan delivering a well-telegraphed interest rate hike last week. Data yesterday showed that core consumer inflation in Japan’s capital slowed in December but stayed above the central bank’s 2pc target, bolstering the case for further rate hikes.
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