DUBAI: Major stock markets in the Middle East may stay firm on Sunday after global bourses rose at the end of last week, with the Dow Jones industrial average climbing 0.7 percent on Friday, and Brent oil finished the week above $41 a barrel.
Active trading volumes, uptrend lines and other technical indicators suggest most Gulf markets remain short-term bullish. Dubai’s index, last at 3,385 points, faces its next technical resistance on its 200-day average, now at 3,499 points.
Saudi Arabia, last at 6,395 points, faces resistance on its 100-day average, now at 6,476 points; it has not exceeded the average since last July, but strong turnover suggests a break is possible in coming days or weeks.
Egypt’s index soared 14 percent last week on euphoria over the devaluation of the currency, which investors hope will attract more foreign capital and help to end the country’s endemic foreign exchange shortage.
Late on Thursday, the central bank raised key interest rates by 150 basis points to fight the inflationary pressure which the devaluation is expected to create. The hike was bigger than expected – the market had been anticipating between 50 and 100 bps – but investors have been focusing on the potential of higher rates to attract foreign exchange inflows, so there may be little if any pull-back in the stock market.