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Wed 2 Sep 2015 06:26 PM

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Gulf markets remain under pressure after oil's sharp drop

Saudi Arabia's bourse recovers from early losses to close 1% lower while Dubai's index drops 2%

Gulf markets remain under pressure after oil's sharp drop

Middle East stock markets fell on Wednesday after oil prices plunged again, although steadier global equities and some positive corporate news softened the blow.

Oil futures, which have been the main influence on equities in the oil-exporting Gulf during the last few weeks of market turmoil, tumbled 8 percent on Tuesday, erasing all gains made on the previous day.

But global stock markets were in better shape, with Asian bourses edging down only modestly on Wednesday while European bourses rose and Wall Street was expected to open higher.

This prevented a repeat of last month's panic selling in Saudi Arabia, where the main equity index fell nearly 3 percent in the opening minutes but closed just 1.0 percent lower. Petrochemicals firm Saudi Basic Industries, whose profits are hurt by cheap oil, dropped 2.2 percent and was the main drag.

Al Rajhi Bank lost 1.4 percent and another large lender, National Commercial Bank fell 1.9 percent.

Credit rating agency Fitch this week revised its outlook on both banks' ratings to negative from stable, following a similar revision for the sovereign's outlook last month, which was due to low oil prices.

Makkah real estate developer Jabal Omar fell 0.7 percent after announcing that it had cancelled a 1.6 billion riyal ($427 million) contract with a construction firm because both sides needed to review it.

But Saudi Telecom (STC) rose 1.6 percent after its chief executive told Reuters on Tuesday the firm expected to spend another $1 billion in the second half of 2015 on enhancing its networks to meet surging demand for web-based services.

Dubai's stock index dropped 2.0 percent with most stocks in the red. But budget carrier Air Arabia, which could benefit from cheaper fuel, rose 1.4 percent.

Abu Dhabi's bourse edged down 0.5 percent and energy firm Dana Gas fell 1.9 percent.

Qatar lost 0.3 percent as heavyweight Industries Qatar, whose business is largely in petrochemicals, fell 1.7 percent.

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