Markets lackluster as summer lull deepens

Markets lackluster as summer lull deepens

Gulf Arab bourses are likely to remain lacklustre on Monday as a summer trading lull, regional political tensions and sustained volatility on global equity and oil markets make investors wary of raising their risk exposure.

July 16, 2012 11:55 by Reuters

Saudi Arabia’s index fell for a fifth session in six on Sunday following downbeat earnings from some petrochemical companies. The sector index is at a 26-month low and recent gains in oil prices – seen as a key indicator for petrochemical prices – may not be enough to boost sentiment.

Other Gulf markets have also been in the doldrums and traders say this trend will likely continue.

“It’s a combination of reasons – one is that we’re still in vacation season, so a lot of the big traders are outside the country and away from the market, especially in Oman and Saudi,” says Adel Nasr, United Securities brokerage manager in Muscat.

“That has really affected volumes and we can’t see any obvious direction for the market because of their absence.

“The issues on global markets have yet to be resolved, plus there are political fears over Syria and Iran – it’s not just one reason.”

Asian shares are up on Monday as fears of an economic hard landing in China subsided, with Premier Wen Jiabao raising the prospect of more policy stimulus if needed. The market focus is now shifting to the next policy move from the United States and a slew of corporate earnings from U.S. firms this week.

(Reporting by Matt Smith; Editing by Dinesh Nair)