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Stock News: Gulf Sentiment May Stay Weak After Oil’s Plunge

Stock News: Gulf Sentiment May Stay Weak After Oil’s Plunge

Brent futures edged up early on Tuesday but traded below $54.

Gulf stock markets may come under more selling pressure on Tuesday after Brent crude oil plunged five per cent on Monday and the threat of a fresh euro zone crisis in Greece also prompted investors to pull out of risk assets globally.

Brent futures hit a fresh 5-1/2-year low of $52.66 a barrel on Monday as markets remained oversupplied. They edged up early on Tuesday but traded below $54.

Global equities tumbled as investors sought the safety of bonds. The U.S. S&P 500 index had its worst day in almost three months on Monday, dropping 1.8 per cent. On Tuesday, MSCI’s broadest index of Asia-Pacific shares outside Japan is down 1.5 percent and Japan’s Nikkei has dropped 2.6 per cent.

Stock markets in the Gulf have generally followed oil’s moves for the last few weeks, although large state budgets announced by Saudi Arabia, Dubai and Oman are likely to shield corporate profits in most sectors from the negative effects of crude’s plunge.

Shares outperforming the markets include Dubai’s low-cost carrier Air Arabia, which could benefit from cheaper fuel. The airline may attract fresh buying on Tuesday after it said on Monday it had bought a 49 per cent stake in Jordan’s Petra Airlines.

The bourse of oil importer Egypt has also done much better than Gulf markets in the past several weeks, but a global investor pullout from emerging markets could still potentially hurt Cairo.

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