Gulf may pull back after retreats in oil, global stocks

 12 Jun 2016 - 8:40

Gulf may pull back after retreats in oil, global stocks

DUBAI: Bourses in the Gulf may fall on Sunday as investors book profits following a retreat in oil prices and a pull-back by international stock markets.

On Friday, Brent crude lost 2.7 percent to close at $50.54 a barrel, its largest drop in a month, while Wall Street followed the lead of Asian and European stocks to fall for a second straight day.

The Saudi stock index gained 3.0 percent to 6,607 points in the final four days of last week after the government announced details of its economic reform plans, which boosted some individual stocks that could benefit from new business opportunities, such as real estate developer Dar Al Arkan . It jumped 20 percent last week.

But the index was already losing momentum at the end of last week as it neared technical resistance on its 200-day average, now at 6,693 points, from which it retreated in April and May.

Some other Gulf stock markets, including Abu Dhabi and Qatar, rose last week but began falling back on Thursday.

Dubai rose to close at 3,371 points on Thursday, testing resistance on the mid-May peak of 3,373 points; a break above that level would trigger a minor reverse head & shoulders
pattern pointing up to around 3,540 points, but a break is by no means certain.

"Investors have now fully played out the recent oil rally and will continue to book profits and stay clear of the stock markets until Q2 results," said one Dubai-based portfolio manager.

"The common adage for stock investors is that they are driven by two factors: fear and greed, and now the former is taking precdence over the latter," he added, referring to concern over Britain's June 23 referendum on whether it should leave the European Union, and the risk of further weakness in oil prices. 

Reuters