DUBAI: Major Middle East markets may test technical support as soon as on Wednesday because of a sluggish global market backdrop and concern about Egypt’s currency crisis.
Brent crude oil futures have edged down near $47 a barrel on data showing an increase in U.S. oil stockpiles and fears that Japan’s economy may have fallen into recession. Asian stock markets are little changed ahead of Chinese economic data.
The Saudi stock index, which dropped 0.4 percent to 6,987 points on Tuesday, is near chart support on its August low of 6,921 points. Its failure to bounce decisively from that support in the last few days indicates it may test the level again.
Dubai’s index, which fell 2.4 percent to 3,300 points on Tuesday, is nearing technical support at its August low of 3,241 points.
Poor earnings from Dubai-listed builder Arabtec may hasten its approach to that level. Arabtec swung to a net loss of 944.8 million dirhams ($257.3 million) in the three months to Sept. 30, much worse than SICO Bahrain’s forecast of a 21.2 million dirham loss, from a year-earlier profit of 68.7 million dirhams.
Down the road, Abu Dhabi National Energy Company (TAQA) swung to a net loss in the third quarter of 416 million dirhams from a net profit of 107 million dirhams in the prior-year period.
Egypt’s index, which tumbled 4.4 percent to 6,825 points on Tuesday, is approaching chart support on its August low of 6,641 points.
It has lost 9.5 percent in the past three days, so some buying-back near the support would be logical. But with the market still confused by whether the central bank intends to devalue the currency or support it with higher interest rates – both of which could damage the economy and the market in the short term – any rebounds may be sold.