Stock markets in the (Persian) Gulf Cooperation Council countries (Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Bahrain, and Oman) look set to start the week on a soft footing after crude oil prices plunged at the end of last week to a three-month low, while a likely US interest rate hike may dampen tourist and real-estate related shares.
Brent crude oil fell 1.6% on Friday to $51.37 a barrel and was down 10% for the week on news of another big rise in US crude inventories, Reuters reported.
Petrochemical shares, which make up roughly one-quarter of Saudi Arabia’s market value, may weigh on that index as many analysts believe product spreads are contracting, and any slide in oil prices could pressure them further.
Expectations that the US central bank will hike rates this week rose to 92% after Friday’s US jobs report, according to Thomson Reuters data.
Markets have largely already priced in the rate hike—Wall Street closed modestly higher on Friday and MSCI’s all-country world stock index rose 0.6%.
Saudi banking shares appear to reflect the anticipated positive impact of a rate hike, but tourist and real estate-related shares elsewhere in the (P)GCC, especially in Dubai, have been weak recently and could see further selling.
National Bank of Kuwait goes ex-dividend on Sunday, which could pressure its share price.
Meanwhile, aggressive foreign selling in index heavyweights in Oman dragged down the MSM30 Index by 0.87% to close at 5,741.21 points. This was the sharpest single day decline since October 2016. The MSM Sharia Index ended at 851.66 points, down 0.53%.
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