DUBAI: Selling pressure may persist in Gulf stock markets on Tuesday after oil prices dropped back to five-year lows and political uncertainty in Greece weakened global equities.
Brent oil has extended its losses into a fourth session on Tuesday, with prices hovering around $57.50 per barrel, as persistent worries about a global supply glut offset concerns about output disruptions in Libya.
Although oil's fresh weakness is unlikely to trigger another panic sell-off of stocks in the Gulf - Saudi Arabia's 2015 budget, announced last week, showed government spending in the region will stay high regardless - it may affect stocks such as petrochemicals and oilfield service firms.
On Monday, crude traded higher while Gulf stock markets were open, helping stocks such as Qatar's Gulf International Services and Saudi Arabia's PetroRabigh outperform.
They could come under pressure on Tuesday.
Domestic news flow in the Gulf remains thin, giving markets no fresh catalysts for a rally.
Saudi International Petrochemical Co (Sipchem) may attract some investors after it said on Monday that it would start production at a new polybutylene terephthalate plant in the first quarter of 2015. However, oil price concerns may dampen interest.
In global markets, Asian shares are extending losses on Tuesday as investors avoid risk after a sharp sell-off in commodities overnight, and also because of political uncertainty in Greece where Prime Minister Antonis Samaras failed to get enough support for his presidential nominee on Monday, and will call a national election for Jan. 25.
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