DUBAI:Gulf stock markets, particularly Saudi Arabia, look set to retreat on Tuesday in response to a renewed plunge of oil prices overnight, which could hit petrochemical stocks.
Saudi petchems were bought back in the past few days after a rebound of crude prices caused some investors to bet that oil had finally bottomed out.
But Monday’s plunge, which took Brent crude down 5.3 percent to below $50 a barrel, casts doubt on that hope and may trigger profit-taking in stocks such as Saudi Basic Industries , which had jumped 12 percent in the past four days.
The Saudi stock index, which last closed at 7,817 points, had already run into technical resistance at 7,812-7,953 points, its highs in September and at the end of August; a pull-back from this resistance would not be surprising.
Other Gulf stock markets have been much less responsive to oil prices in recent days but sentiment in them could be dampened by any pull-back in Saudi Arabia.
Egypt’s stock index is technically bullish after establishing an uptrend channel from its August low; trading volume in the past few days has jumped to its highest levels this year, another positive technical sign.
However, its rebound may slow on Tuesday because of soft global equity markets, with MSCI’s broadest index of Asia-Pacific shares outside Japan down nearly 1 percent.