Kristian Rouz — Gulf bourses extended gains during Sunday's trading despite a strong downward pressure stemming from the uncertainty over the Iranian talks, the breach in humanitarian ceasefire in Yemen and the worn-out rebound in crude prices. Middle Eastern investors were bullish amidst the optimism in regard to the Greek debt negotiations, possibly triggering a rally in global stocks on Monday. Construction and real estate shares also gained in Dubai due to the rife demand for property.
Dubai's stock index rose 0.7% in a broad rally across most sectors. Financials performed second best after real estate in Dubai, with Amlak Finance adding 1.5%.
In Abu Dhabi, stocks rose 0.7% as well, led by gains in the telecommunications sector with local phone and Internet provider Etisalat adding 0.7%. Shares in Qatar rose just 0.2%, led by construction sector, with Barwa Real Estate rising 1.2%.
Albeit solid performers, the Mideast stocks may be facing more bearish trends in the short-term, chiefly, due to the concerns of the future of crude prices. Oil jumped on Thursday as the Iranian nuclear talks reportedly ended without a deal, however, crude was flat on Friday as the global oversupply was further supported by the increase oil production in the US and the shrinking demand from China.
Also on Friday, one of Saudi Arabia's biggest banks reported the nation's economy was hurt by the prolonged period of lower oil prices.
"Relatively weak oil prices have finally begun to weigh on the Saudi economy," Samba Financial Group (Formerly known as the Saudi American Bank) stated on Friday. "Activity is showing signs of slowing as the government begins to dial back spending: imports have fallen as private contractors retrench. Bank lending growth has also slowed, and the growth in May retail sales dipped to its lowest rate since October 2013."
The bank said the decline in investment activity is a close perspective for Saudi Arabia, while governmental spending on wages, pensions and the overall support for the quality of life is likely to remain in place for at least a while.
Violent sectarian clashes in Yemen broke out late this week again, effectively putting an end to the UN-negotiated ceasefire, adding to the downward pressure on the Mideastern financial world.
However, the optimism over the seemingly close Greek debt restructuring deal, having pushed stocks higher, is proving to be a more important factor in the eyes of market participants.
