Abu Dhabi: The regional stock markets in the week ahead are likely to be highly volatile, bearing the brunt of the sell off in the US and European stocks Thursday and Friday due to fears of faltering global economic recovery which triggered a decline in international oil prices, say local market analysts.
Saudi Arabian shares declined to a one-month low yesterday, led by petrochemical companies and banks, an indication of things to come in other markets of the region when they resume their own trading for the week in the Ramadan season. Saudi Arabia holds one-fifth of the world's proven oil reserves.
Unemployment
European and US stocks declined last week as reports showed US jobless-benefit claims climbed to the highest level in nine months and Japan's economy grew at the slowest pace in three quarters.
The benchmark Stoxx Europe 600 Index fell 1.3 per cent last week, the biggest drop since July 2. The Standard & Poor's 500 Index fell 0.7 per cent.
Treasury 10-year notes gained for a fourth week, pushing yields to the lowest since March 2009, as economic data showed the recovery is losing momentum and the Federal Reserve resumed purchases of US debt. Yields on two-year notes dropped below 0.46 per cent for the first time since the Treasury began issuing the securities on a regular basis in 1975.
"We are still tracking the performance of the international markets, which have lately been highly volatile. The sell off in US and Europe affected oil prices which traded at around $73 (Dh268.08) a barrel.
"This impacted Saudi Arabia's market performance today. Going forward, we see some weakness in the regional markets due to high volatilty in the global financial markets," Marwan Shurrab, Assistant Fund Manager for Gulfmena Alternative Investments told Gulf News by telephone.
"The regional markets are going to get affected for a short while by what's happening in the international markets. However, the support levels are expected to remain. There may be a sideways movement until the exit scenario for investors becomes clearer. At the moment, the trading volumes on the markets are really low and we continue to trade in a downtrend," said market analyst Ahmad Hamdy. Crude oil fell to a six-week low, settling at $73.46 a barrel on the New York Mercantile Exchange on Friday. Crude oil futures fell 2.6 per cent last week.
