Most Middle Eastern stock markets fell yesterday after oil prices pulled back sharply, interrupting a rally that had been built to a large extent on hopes that crude had bottomed out.
As Brent crude fell back below $33 a barrel, the Saudi stock index dropped 1.3% to 5,942 points, retreating from close to technical resistance at the February and January peaks of 6,056-6,098 points.
The petrochemical sector led the market down with Saudi Basic Industries losing 2.1%. Second-tier speculative stocks also tumbled. Saudi Paper, which had jumped 8.1% in unusually heavy trade on Tuesday, tumbled 8.1% yesterday.
Retailing firms were weak. Al Othaim Markets, a supermarket chain, fell 1.9% although the board recommended a cash dividend of 2riyals per share for 2015, up from 2014 and above NCB Capital’s forecast of 1.75 riyals.
The retail sector may be hurt this year by the erosion of consumers’ purchasing power after inflation spiked in January. On Tuesday the kingdom’s statistics department said consumer price inflation hit 4.3% year-on-year, the highest since the data series began in 2012, after austerity measures in the state budget raised costs of electricity, water and gasoline.
Dubai’s index fell 1.7% to 3,137 points as investors booked profits close to chart resistance at the late December peak of 3,189 points.
Emirates NBD, the largest lender by market value, fell 2.8% after adding 2.6% the previous day. The shares went ex-dividend yesterday. On Tuesday, Goldman Sachs raised its recommendation for the stock to “buy” from “neutral”.
But builder Drake & Scull, which has been rebounding in the past few weeks from a record low, added a further 2.7%.
In Abu Dhabi, the stock index dropped 0.7%. Abu Dhabi Commercial Bank, which had surged 2.5% on Tuesday after Goldman Sachs raised its price target for the stock to 8.1 dirhams with a “buy” rating, fell 1.0% to 6.88 dirhams.
Bahrain’s market outpaced the region, rising 1.1% on the back of Ahli United Bank, the country’s biggest listed lender, which jumped 4.6% after it posted an 11.1% increase in its fourth-quarter net attributable profit to $118.0mn. SICO Bahrain had forecast $110.3mn.
Egypt’s main benchmark dropped 0.8% to as Palm Hills Development retreated 3.4% and Global Telecom Holding lost 4.8%.
Elsewhere in the Gulf, Kuwait’s index edged up 0.2% to 5,175 points, while Oman’s index fell 0.5% to 5,404 points.