Dubai's index slides back below 2,900 points, after rising as high as 2,918 within minutes of the opening on news of the breakthrough international agreement on Iran's nuclear programme. Dubai would likely be one of the main beneficiaries of any revival of trade between Iran and the test of the world. But the index quickly retreated to a nearly flat level, dragged down by heavyweights such as property developer Emaar, which is down 1.3 percent, and lender Emirates NBD, which has declined 1.1 percent.
"The main long-term bullish trend shall continue higher if we close over 2,930 resistance levels," NBAD Securities says in a note.
The index has risen 78 percent so far this year. Some think it could see a fresh boost after November 27, when the Paris-based Bureau International des Expositions is due to announce whether or not Dubai will host the Expo 2020 world fair. But many institutions believe the benefits of the Expo have largely been priced in and are willing to sell into strength.
News of the international agreement on Iran's nuclear programme may give Gulf stock markets a positive tone on Sunday, while retail investors in Dubai may make last-minute purchases of stocks before this week's decision on whether the emirate will host the 2020 World Expo.
The nuclear deal in Geneva, which includes minor sanctions relief for Iran, is only partial and will not have much immediate impact on the economic climate in the Gulf. But it does reduce a geopolitical concern which weighed on markets at various times this year.
"We have good news coming from Geneva on Iran. It will bring more confidence from foreign investors," says Sebastien Henin, portfolio manager at The National Investor in Abu Dhabi.
"Locally, we saw a lot of discount on geopolitical risk from local but not from foreigners. There should be optimism on the market, especially if Dubai wins the Expo this week."
If Iran does eventually rejoin the global trading system Dubai, with its close trading links to the country, is likely to be a chief beneficiary.
Meanwhile, retail investors in Dubai may buy property and construction stocks, betting that a positive Expo decision, which is widely expected, would trigger a fresh leg up in the property market and new infrastructure building.
"Two days before the expo, we can expect the Dubai market will be the heart of the region for coming sessions," says Henin.
However, many of the benefits of the Expo - which would be spread over many years - may already be priced into the market. So some institutions are likely to sell at the highs, as part of a strategy of rotating into Gulf markets that have performed less well this year.
The Dubai index, which last closed at 2,891 points, faces major technical resistance around 2,900 points, where it stalled in late October and early November. Property heavyweight Emaar, last at 6.26 dirhams, faces strong resistance at 6.34-6.35, the peaks in August and October.
Abu Dhabi said at the weekend that it had decided to scrap a 5 percent cap on annual rent increases, opening up a property sector where many are paying below current market rents. This may be modestly positive for local real estate firms such as Aldar Properties.
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