Stock News: Stronger Oil May Support Gulf Markets
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Stock News: Stronger Oil May Support Gulf Markets

Stock News: Stronger Oil May Support Gulf Markets

Brent crude jumped 2.2 per cent to $57.80 per barrel on Friday, posting its largest two-week gain in 17 years.

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Gulf equity markets may rise on Sunday after oil made further gains, although the commodity’s price looks likely to remain volatile.

Brent crude jumped 2.2 per cent to $57.80 per barrel on Friday, posting its largest two-week gain in 17 years because of falling oil rig counts and violence in producer Libya.

Oil prices affect stock markets in the region mainly through their impact on government spending, which is a major driver of economic growth, and on the prices of petrochemicals products; companies from the sector make up a large weighting on Saudi Arabia’s bourse.

Although some countries have already announced government budgets for the next fiscal year, actual state spending levels in the Gulf often differ from projections so hopes for higher oil revenues may support all markets.

On the other hand, many Gulf companies have already reported fourth-quarter results, leaving investors with fewer stock-picking ideas. Meanwhile, in Egypt the earnings season is just starting.

On the technical side, Dubai and Kuwait are the only two markets in the Gulf yet still to break above resistance on their late December highs.

Dubai’s benchmark closed at 3,887 points on Thursday; it peaked at 4,007 points in late December. Kuwait’s index, last at 6,700 points, is just below a similar barrier of 6,706 points, having failed to hold above it for more than one session last week.

On global markets, U.S. shares edged down and European markets were mixed on Friday, partly because of worries about Greek debt negotiations.


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