Stock markets in the UAE, Saudi Arabia soar as the price of Brent jumps to nearly $63 per barrel
Stock markets in Saudi Arabia and the United Arab Emirates soared on Thursday after the price of oil rebounded and the Riyadh government eased investors' fears by saying it would continue spending heavily on economic development.
Saudi Arabia's bourse was up 8.7 percent two hours into its session. All traded stocks posted gains and some, such as Advanced Petrochemical Co, were up 10 percent, the bourse's daily limit for price moves.
The main fear of Gulf investors as bourses have tumbled in recent weeks has been that cheap oil would cause governments to cut back spending.
But Saudi Arabian Finance Minister Ibrahim Alassaf said on Wednesday that his government would continue spending strongly on development projects and social benefits in its 2015 budget, expected to be announced on Monday.
UAE, Kuwaiti and Qatari officials have made similar statements in recent days.
Meanwhile, the price of Brent crude for February delivery jumped 2.5 percent and approached $63 per barrel.
"It's a combination of stronger oil and US equity markets as well as news from Saudi Arabia yesterday," said Sebastien Henin, head of asset management at The National Investor in Abu Dhabi, said of Gulf markets' rally.
"Local equity markets had been hurt unnecessarily in the few previous sessions."
Kuwait's bourse added 1.9 percent on Thursday and Oman jumped 3.7 percent. Qatar's bourse was closed for a national holiday.
Dubai's equities benchmark ended 13.0 percent higher as all traded stocks rose; some surged by their daily 15 percent limits, including heavyweight developer Emaar Properties. Trading volume reached its highest since July, a positive technical factor.
Shares in construction firm Drake and Scull rose 15 percent after it said its board would consider buying back up to 10 percent of the company's shares at a meeting on Dec. 22.
The announcement, and buy-back activity by Abu Dhabi's Waha Capital and Abu Dhabi Commercial Bank on Wednesday under existing programmes, were signs that UAE companies think their share prices are now too cheap.
Abu Dhabi's index surged 6.7 percent in a broad rally. Aldar Properties, the emirate's largest listed developer, rose its 15 percent daily limit.
And just one day later...Friday 19th at 12noon...Oil is back down to $59.50/Brl. Good job the DFM is not open today as I just wonder what this journalist would have to say about it...
Funnily enough, last nights S&P/DJ rose...but that was, I would suggest, a distortion that will be rectified very soon. NO data out of the USA makes their economy fundamently sound. Their stockmarkets are heavily stretched on valuations and falsely supported by FED buying and Corporate Share buy backs.
It will all come to a close sooner or later. Mathematically, it has too. The 'cusp' is not so far away...