DUBAI: Stock markets in the Middle East look set to rise on Sunday as oil prices rebounded at the end of last week and global equities rallied.
Brent crude futures made solid gains on Friday and settled at $34.74 per barrel on hopes for a deal between major exporters to cut production. Stocks jumped worldwide after the Bank of Japan stunned markets by adopting negative interest rates. The Nikkei ended 2.8 percent higher and Wall Street surged over 2 percent.
It is by no means clear that oil and global equities have bottomed out, but the improved market climate looks likely to encourage investors in the Gulf to buy beaten-down blue chips and stocks with good dividend yields.
On Thursday, there were already signs of a technical rebound in some Gulf markets. The Saudi index’s 3.2 percent rise to 5,880 points triggered a minor double bottom formed by the lows since mid-January and pointing up to around 6,300 points; a rise in trading volume was also technically positive.
Dubai’s share index rose 3.8 percent in the largest volume this year, suggesting some investors were returning to the market.
“The confidence level is still relatively weak, and we see a gradual slow and steady accumulation of stocks in investors’ portfolios,” said Shiv Prakash, senior analyst at Abu Dhabi’s NBAD Securities.
Once sentiment becomes positive as macroeconomic headwinds abate, the rebound will turn into a rally, he added.
Egypt’s market may also rise in line with the global recovery but foreign investors have been pulling out because of expectations for a currency devaluation – the Egyptian pound was soft in the black market last week – so Cairo may lag other bourses.