Most Middle East stock markets dropped on Thursday as disappointing economic signals from China and Europe coupled with an inverted U.S. bond yield curve stoked fears that the global economy was hurtling toward recession.
Gross domestic product growth in the 19-country euro zone slowed down to 0.2 per cent in the second quarter, from 0.4 per cent in the first three months of the year, while intensifying U.S. trade war sent China’s industrial output growth cooling to a more than 17-year low.
Reinforcing the looming global slowdown was the U.S. treasury bond yield inversion, meaning rates on short-term bonds were higher than long-term yields, which is widely seen as signalling recession.
The mounting concerns also caused oil prices to shed a further 3 per cent, extending the previous session’s 3 per cent drop.
In Dubai, the index was down 1.3 per cent led by real estate stocks. The emirate’s blue-chip developer Emaar Properties shed 1.9 per cent while Damac Properties fell 3.2 per cent. The two firms earlier this month reported lower second-quarter profit, hurt by the emirate’s slumping property market.
The emirate’s oversupplied residential real estate market, down by at least a quarter since the middle of 2014, is showing no signs of a recovery.
The Abu Dhabi index was flat as a 1.1 per cent gain in market heavyweight First Abu Dhabi Bank offset losses in real estate sector.
Saudi Arabia and Oman remained closed for their week-long Eid holiday and will resume trading from Sunday.