Muscat: The Omani stock market extended its decline this week, recording a three-week long slide compared to last month’s levels and closed below the previous resistance level, according to an analyst.

“The main index saw significant volatility and could continue trending toward its lowest point this year,” said Hani Abuagla, Senior Market Analyst at XTB.

“While the market has been trading with some volatility and in an unclear direction throughout the year, it could be under additional selling pressure if it breaches below support levels,” he added.

The market recorded significant declines across the financial, industry and services sectors with only a minority of stocks recording a positive performance, said Hani Abuagla.

“The main index was weighed by the negative sentiment and fell despite the large increase in trading volumes and value which neared the highest levels this year. Stocks reacted with significant volatility after the Federal Reserve interest rate meeting,” he added.

The US central bank maintained a hawkish tone and has indicated its expectations for interest rates to remain at high levels for a longer period of time. “Maintaining a tight monetary policy could continue to weigh on the Omani stock market and on the local economy as a whole. In this regard, traders could continue monitoring new economic data for clues about how monetary policy could evolve,” said Hani Abuagla.

While bank loan volumes in Oman continue to see growth, a tight monetary policy could weigh on demand as financing costs could remain elevated for longer. As a result, the Omani banks could see some risks to the downside over the medium term.
On the other hand, the developments in oil markets could support the market to a certain extent as prices could continue to increase. Oil markets have been on a strong uptrend and have benefited from tight supply levels.

“The Omani stock market followed other markets. In the US and Europe, stocks recorded losses as well. In the GCC, the Saudi stock market also recorded a negative week while the Abu Dhabi and Qatar stock markets were trading sideways. Conversely, the Dubai stock market was able to rebound strongly,” said Hani Abuagla.

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