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Stock News: Dubai, Other Gulf Markets Rebound On Stronger Oil

Stock News: Dubai, Other Gulf Markets Rebound On Stronger Oil

Brent crude climbed above $62 per barrel on Monday, after hitting 5-1/2-year lows of $60.28 earlier.

Most Middle East stock markets, led by Dubai, rose in early trade on Monday after the price of oil recovered slightly.

Brent crude climbed above $62 per barrel, after hitting 5-1/2-year lows of $60.28 earlier, as traders began pricing in expectations of improving global manufacturing data to be published later this week.

Dubai’s stock index jumped 4.2 per cent as most shares in the emirate gained. Emaar Properties and Arabtec, which dominated trading, added 6.5 and 5.9 per cent respectively.

The market had tumbled 14.4 per cent in the two previous sessions as oil’s plunge triggered panic selling. Fund managers said that with the outlook for oil still uncertain, Monday’s stock market rise was not necessarily the start of any extended recovery.

“It’s just a normal technical rebound, there’s nothing more at this stage,” said Sebastien Henin, head of asset management at The National Investor in Abu Dhabi. “It is not a game changer.”

Abu Dhabi’s index rose 1.3 per cent and Qatar added 0.7 per cent. Bourses in Oman and Kuwait, however, edged down 0.3 and 0.7 per cent.

Saudi Arabia’s benchmark rose 0.7 per cent. Al Rajhi Bank was the main support, adding 1.1 per cent. Shares in petrochemicals giant Saudi Basic Industries slipped 0.6 per cent; the sector’s earnings are particularly vulnerable to cheap oil.

Egypt’s index, which suffered in the last few sessions from bearish sentiment across the Middle East, edged up 0.8 per cent.

Gulf markets plunged in line with oil prices for the last few weeks as investors became worried that a sharp decline in oil revenues could trigger government spending cuts and slow non-oil growth.

While analysts and fund managers believe this is unlikely to happen in countries other than Oman and Bahrain, they think stock markets may remain under pressure from retail investor selling in the near future, until there is evidence that government spending and corporate profit growth is staying strong.

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