Gulf markets to consolidate, Saudi may rebound a bit

Gulf stock markets may consolidate on Monday as their initial reaction to the Iran nuclear deal fades, while Saudi Arabia could rebound moderately after a slight uptick in oil prices.

The Saudi stock index sank 1.7 percent to 8,590 points on Sunday because of the prospect of lower oil prices if a final agreement by a June 30 deadline lifts sanctions on Tehran and allows more Iranian oil into the market. Brent oil plunged nearly 4.0 percent on Thursday.

But the index held minor chart support at its March low of 8,497 points, and a 1.3 percent rebound by Brent to $55.65 a barrel on Monday morning may encourage some buying back of Saudi stocks.

Elsewhere, Dubai’s market rose 1.4 percent on Sunday on hopes that the lifting of sanctions would create new business opportunities for the emirate.

A handful of stocks around the Gulf were buoyed by the Iran factor; oilfield services provider Gulf International Services (GIS), which could benefit from development of Iranian gas fields, rose 2.6 percent.

But the impact was not large, suggesting most investors will wait to see a final nuclear agreement before betting on Iran, and understand that the dismantling of sanctions may be a slow and uncertain process.

Asian shares are higher on Monday morning and the U.S. dollar has steadied but remains under pressure after a poor U.S. jobs report caused investors to pare bets that the U.S. Federal Reserve would hike interest rates anytime soon.

Oman’s Bank Dhofar set a price of 0.275 rial per share for its 45 million rial ($116.9 million) rights issue, only marginally below its last market price of 0.285 rial, suggesting the issue may not cause much selling of the shares by investors aiming to buy back through the rights.