Confidence returns in Gulf stocks as oil stabilises

Dubai: Investors, who lost billions of dollars due to the recent meltdown in regional markets, seem to be breathing a sigh of relief this week as confidence returns to the markets.

Gulf indices ended more than a per cent higher as traders bet on speculative stocks after a rebound in crude oil prices. Dubai index led the gains regionally, gaining nearly 1.5 per cent for a third straight session in a row.

“Confidence is returning to market and is evident by the performance of speculative stocks in smaller and mid cap space,” said Saleem Khokhar, head of equities at National Bank of Abu Dhabi’s asset management group.

The Dubai Financial Market General index closed 1.46 per cent higher at 3,287.02, while Abu Dhabi Securities Exchange general index closed nearly half a per cent higher. In Saudi Arabia, the Tadawul index closed 1.45 per cent at 6,180.66.

“In the near term, we see the current levels sustaining due to positive global backdrop in US GDP data and expectations of further stimulus by China. In addition to that, we have seen a rebound in crude oil prices,” Khokhar said.

Oil hit its highest level in two months on the back of expectation of further stimulus in China. Benchmark Brent crude futures were up 44 cents at $37.01 a barrel at, the highest in eight weeks. US crude futures were trading at $34.50 a barrel, up 75 cents and close to a four-week high reached on Friday.

“As for oil, calamity is mostly over and we have said before that a bottom is in place for the time being and we do not cogitate that price will go any lower for the time being,” said Naeem Aslam, chief market analyst with AVA Trade, adding: “in March we have the Opec meeting and traders will be watching this very carefully with some high expectations and elations that perhaps some more good news may come out of this meeting.”

Oil has slipped about 7 per cent this year and averaged less than $32 a barrel during the past two months, the longest stretch below that level in more than 12 years. Gold also edged half a per cent higher to be at $1,244.12 per ounce.

Global stocks also rose, gaining for a third straight session in a row as investors raised bets on stimulus from the European Central Bank and People’s Bank of China post disappointing manufacturing data.

“Market participants have elations that perhaps the ECB (European Central Bank) president will deliver next time, which he has promised so many times. If there is a big bazooka from him, we are expecting some short rally for the equity market,” Aslam said.

The Dow Jones Industrial Average was up 0.47 per cent, starting the month on a positive note after longest stretch of losses since 2011 fanned by growth concerns in China, the world’s second largest economy.