Hopes for US political deal to support Gulf markets

Index has immediate support around 2,750 points, where it peaked in August
By Reuters
Sun 06 Oct 2013 10:46 AM

Hopes that U.S. politicians may find a way as soon as this week to end the U.S. government shutdown and avoid a debt default look set to support Gulf markets on Sunday, although short-term technicals suggest major gains are unlikely.

U.S. stocks and global oil prices rose on Friday partly because of bets that a U.S. political deal could be reached. While that process might take another few weeks, it could eventually trigger a global rally in stocks.

However, short-term technicals for several Gulf markets have weakened. Dubai closed well off its intra-day high on Thursday as 14-day momentum posted a negative divergence, a classic sign of a pause in an uptrend. The index has immediate support around 2,750 points, where it peaked in August.

Saudi Arabia's index has established significant resistance around 8,070 points in recent weeks while 14-day momentum for the Kuwait market dropped below zero on Thursday.

In Dubai, stock speculators may react positively to the government's announcement on Saturday of some details of its plans to develop the emirate into a centre for Islamic business activity.

Officials said one of their focuses would be growing the Islamic re-insurance sector, which could boost shares in Dubai Islamic Insurance and Reinsurance Co as well as Takaful Emarat Insurance and Dar Al Takaful.

Ajman Bank said it had sacked its Chief Executive Mohammed Zaqout and put the chief financial officer temporarily in charge, less than six months after appointing Zaqout to lead the bank; the reason for the sacking was not given. Ajman Bank shares rose sharply erlier this year but since the end of July have underperformed the market, dropping 13 percent.

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