Saudi, other Gulf markets nearly flat on oil concern

Saudi Arabia’s stock closed at 0.02 per cent higher on Tuesday, nearly flat.

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Saudi Arabia’s stock benchmark Tadawul All Share Index was nearly flat, closing 0.02 percent higher at 9,713.07 points on Tuesday as Brent oil stood unchanged ahead of weekly US crude inventory data. Crude reserves are expected to hit another high, but a weaker dollar helped to put a floor under oil prices on Tuesday.

Equities investors across the world were cautious before the two-day U.S. Federal Open Market Committee meeting starting later on Tuesday.

Market expectations for a U.S. interest rate increase have been pushed further down the road, with few investors now expecting a rate hike in June and most predicting a move later this year.

But there is risk associated with this week’s Fed meeting because the U.S. dollar’s strength has hurt Gulf-based exporters such as Savola Group, Saudi Arabia’s top food maker. Savola shares fell 0.8 percent on Tuesday. Dubai property stocks are also sensitive to the U.S. rate outlook.

Saudi Arabian heavyweights Saudi Basic Industries and National Commercial Bank were among the main supports on Tuesday, climbing 0.5 percent each.

Most other Gulf markets also moved 0.1 percent or less, with the exception of Dubai, which climbed 0.7 percent to a new 4-1/2-month closing high of 4,182 points. It faces major technical resistance at 4,251 points, the 200-day average.

Emaar Malls was one of the main supports, jumping 2.9 percent. Dubai brokerage Arqaam Capital said this week it expected index compiler MSCI to add the stock to its emerging market index in the May 12 semi-annual index review.

Dubai Investments jumped 4.2 percent to 2.99 dirhams, attracting the attention of investors focused on technical analysis as it rose above its mid-April peak of 2.96 dirhams.

But telecommunications operator du lost 1.0 percent after reporting a 0.6 percent fall in first-quarter profit. The firm made 487.1 million dirhams ($132.6 million).

Qatar’s index inched up 0.1 percent and Qatar Navigation (Milaha) climbed 1.5 percent, even though the company warned investors of a challenging 2015 on Monday, saying conditions in its offshore business remain weak and its investment business is exposed to instability in local equity markets. The shipping and offshore service firm reported a 4 percent rise in first-quarter net profit to 365 million riyals ($100.3 million). That was in line with the forecast from QNB Financial Services, which had expected 370.3 million riyals.

This was first published on Saudi Gazette.

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