|15 August, 2019

Mideast Stocks: Gulf stocks slide amid mounting fears of global slowdown

Egypt ends four days of gains

Traders react during the opening of the Dubai stock market June 26, 2016. Image used for illustrative purpose.

Traders react during the opening of the Dubai stock market June 26, 2016. Image used for illustrative purpose.

REUTERS/Ahmed Jadallah

Most Middle East stock markets dropped on Thursday as disappointing economic signals from China and Europe coupled with an inverted U.S. bond yield curve stoked fears that the global economy was hurtling toward recession.

Gross domestic product growth in the 19-country euro zone slowed down to 0.2% in the second quarter, from 0.4% in the first three months of the year, while intensifying U.S. trade war sent China's industrial output growth cooling to a more than 17-year low. 

Reinforcing the looming global slowdown was the U.S. treasury bond yield inversion, meaning rates on short-term bonds were higher than long-term yields, which is widely seen as signalling recession.

The mounting concerns also caused oil prices to shed a further 3%, extending the previous session's 3% drop. 

Egypt's index closed 1.7% lower ending its four-day winning streak. The index particularly jumped in the previous two sessions on news that the country's headline inflation rate fell to its lowest in nearly four years.

Commercial International Bank was down 2% and cigarette maker Eastern Company fell 3.1%. It raised prices of some of its cigarettes by 4.5% to 6%, citing higher labour costs. 

In Dubai, the index was down 1.3% led by real estate stocks. The emirate's blue-chip developer Emaar Properties shed 1.9% while DAMAC Properties fell 3.2%. The two firms earlier this month reported lower second-quarter profit, hurt by the emirate's slumping property market.

The emirate's oversupplied residential real estate market, down by at least a quarter since the middle of 2014, is showing no signs of a recovery.

Qatar's index dropped as much as 2.4%, but it clawed back some losses to close 0.6% lower after the central bank said Qatar's economic growth would accelerate over the next two years amid expectations of stable oil prices and continued strong exports. 

Qatar Insurance and Vodafone Qatar fell 3% and 4.6%, respectively.

The Abu Dhabi index was flat as a 1.1% gain in market heavyweight First Abu Dhabi Bank offset losses in real estate sector.

Saudi Arabia and Oman remained closed for their week-long Eid holiday and will resume trading from Sunday.

(Reporting by Maqsood Alam in Bengaluru; Editing by Toby Chopra) ((maqsood.alam@thomsonreuters.com;))

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