DUBAI :Major Middle Eastern stock markets look set to consolidate on Sunday with a firm bias thanks to positive short-term technical signals.
With Brent oil still languishing below $45 a barrel and a lack of positive corporate news, an extended rally by the Gulf bourses looks unlikely. Moderate trading volumes show many investors remain wary of the markets.
Uncertainty about what the Egyptian central bank will do to address the country’s foreign currency shortage continues to weigh on that market.
But technicals have strengthened in the past few days, suggesting markets may at least have found a short-term floor and could continue rising for now.
The Saudi stock index, last at 7,034 points, has been rebounding in recent days from support on November’s two-year low of 6,828 points. It faces resistance on the November high of 7,161 points; any break would trigger a double bottom pointing to a larger rally.
Dubai, last at 3,273 points, triggered a minor double bottom formed by the November lows on Thursday; the target of that pattern is 3,327 points.
Egypt closed near its intra-day high for the past two trading days, a positive signal for the short term.
The decision of credit rating agency Standard & Poor’s to downgrade Oman’s sovereign debt on Friday was a reminder of the financial pressures faced by some Gulf oil exporters and could dampen Omani banks.
However, trading in that illiquid market has very little impact on other Gulf bourses.