U.S., Russia deal on Syria may boost Gulf markets

Sentiment in Gulf markets is likely to be boosted by the weekend’s deal between the United States and Russia on eliminating chemical weapons from Syria.

Although it is not clear whether the deal will prove viable or avert a U.S. military strike in the long term, it seems certain to prevent a strike for weeks or months - allowing investors to focus again on strong economic fundamentals.

Most regional share indexes have already recovered about half of losses triggered in late August because of the Syria crisis. Because most markets are already sharply higher this year, they may not recover all of their Syria-related losses any time soon, as there will be profit-taking into strength.

Dubai, for example, last closed at 2,539 points; it faces initial technical resistance at the early September high of 2,622 points, before strong resistance on the August peak of 2,762 points.

Global equity markets are nervous about this week’s U.S. Federal Reserve meeting, which looks likely to cut back monetary stimulus. But as recent months have shown, markets in Gulf countries, with current account and budget surpluses, are better placed than most to withstand a reduction of stimulus.

In Egypt, Ezz Steel may see buying after a government source said the country is considering imposing an anti-dumping duty on Turkish steel imports to protect the domestic industry.