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29 March 2024

Global fears keep Gulf stocks in red

Published
By AFP

Gulf stock markets dropped on Tuesday as world markets continued to deteriorate over fears of a new global economic recession because of European and US economic woes.

"There is a complete surrender to the developments in global markets ... Local markets are ignoring the economic fundamentals of the region," said financial analyst Wadah Taha.

"There is total panic and an inability to diagnose the developments in Europe and the United States and understand their potential impact on regional markets," he said.

Although oil prices continued to fall, Taha said that the impact on the economies of the oil-rich region should be limited as current prices remain above the prices projected in governments' budgets.

The Dubai Financial Market index closed 1.95 per cent down at 1,444.29 points, with leading Emaar Properties falling 2.83 per cent and Arabtec construction group dropping 2.99 percent.

In Abu Dhabi, the capital's stock market slipped 1.34 per cent to 2,577.76 points at the close. All sectors were down, with energy leading the losses by a drop of 3.93 percent.

The Saudi market, closed later reducing its losses to 0.81 per cent at 6,008.67 points, after it plummeted 4.27 per cent at the opening.

The leading petrochemical sector, which shed 5.49 per cent of its value at the start of trade, narrowed its losses to 1.05 percent.

The largest Arab bourse shed 5.46 per cent of its value on Saturday after being the first market to feel the impact of the historic downgrading of the US credit rating late on Friday by Standard & Poor's.

Other Gulf markets closed in the red on Tuesday.

Qatar Exchange, the second-largest Arab stock market, was 1.76 per cent down at 8,070.69 points.

Kuwait Stock Exchange also widened its losses to 1.25 percent, closing at 5,882.2 points.

Muscat Securities Market in Oman closed 2.42 per cent down at 5,894.02 points, and Bahrain Bourse dropped 0.73 per cent to 1,265.38 points.

The price of New York crude sank below ê80 in Asian trade and its Brent counterpart briefly dropped under ê100.

"It is understandable if companies linked to energy and petrochemicals were affected, but many listed companies are local in their activities and their drop is not justified," said Taha.

He said confidence was unlikely to return to Gulf markets before strong signals for drastic action in Europe and the United States to calm global markets.

"Markets will remain in fear, watching what happens abroad and ignoring local fundamentals," he said.

Global markets are reeling under the impact of fears over about global economic growth and sovereign debt after the downgrading of the US credit rating and debt problems in the eurozone.