Dubai’s bourse today extended losses as investors continued to book early-year gains against a weak global backdrop. Qatar’s market barely moved in early trading, amid prospects for a new ruler in the Gulf state.
Dubai’s index fell 2.3 percent to 2,247 points in early trading, heading for its third substantial drop in a row, but it is still up 38.8 percent year-to-date.
Yesterday’s drop triggered a bearish right triangle formed by the highs and lows since early June, signaling the end of the rally that began in early April. The index is now testing minor support on the 38.2 percent retracement of the rally, but the triangle points lower, to near the 2,100-point area.
“We’re heading into a corrective phase, which could go on for months,” says Bruce Powers, a technical analyst and corporate advisor at Orpheus Capital. “The more a rally is extended, the greater the chance of a sharp fall and this is happening now.”
Powers says the drop, when global markets are under pressure, is not a surprise and the next support level is at 2,038 points, followed by 1,929. “Given the acceleration in the drop, there’s a pretty good chance we will hit the 1,950 area.”
In Abu Dhabi, the benchmark slipped 0.2 percent to 3,555 points early today, trimming its 2013 gains to 35.3 percent. The United Arab Emirates capital’s index had a slower rally than Dubai, so the decline is slower.
Elsewhere, Doha’s index retreats 0.3 percent to 9,208 points, heading for its seventh decline in the last eight sessions since the market hit a 57-month high.
Late on Sunday the Qatari-owed Al Jazeera television channel said the emir, Sheikh Hamad bin Khalifa al-Thani, 61, would meet ruling family members and decision makers on Monday “amid reports that he intends to hand over power to his crown prince, Sheikh Tamim.”
At mid-morning there is still no clarity on exactly when and how the transition might occur.
Kuwait’s benchmark fell 1.1 percent to 7,983 points, while Oman’s bourse was little changed this morning.
On global markets, Chinese shares dragged Asian bourses to a fresh nine-and-a-half-month low on Monday as investors worried about Beijing’s economic and financial stability and markets scrambled to price in the Federal Reserve’s plan to slow its stimulus drive later in 2013.