Market Wrap MENA-Asia 3 August: Gulf Firms While Korea Falls 5 Percent and Oil Slides

By The Edge Research Team

Gulf equities held firm on Monday even as crude oil tumbled on the OPEC+ decision to raise September output, while Asian markets were mixed as South Korea gave back part of last week’s record rally. Most Gulf benchmarks rose, led by Dubai and a broad advance across Saudi Arabia and Kuwait, and Brent crude fell more than 5 percent, per CNBC and the exchanges. The divergence, firmer regional equities against a sharp drop in oil, framed the session.

Asia was split. South Korea’s Kospi fell 5.12 percent to 6,257.45, unwinding part of Friday’s record surge, while Japan’s Nikkei 225 eased 0.94 percent to 63,754.90, the Topix 1.08 percent and China’s Shenzhen Component 0.96 percent, per CNBC. The other side firmed: India’s Nifty 50 rose 1.60 percent, South Korea’s Kosdaq added 2.44 percent, Taiwan’s Taiex 0.62 percent, Hong Kong’s Hang Seng 0.48 percent and Australia’s ASX 200 0.47 percent, while Singapore’s Straits Times eased 0.29 percent.

Oil sank on the supply decision. Brent crude fell 5.22 percent to 83.34 dollars a barrel and West Texas Intermediate 6.28 percent to 79.35 dollars, per CNBC, after OPEC+ agreed at the weekend to raise production for September, a step the market read as adding barrels into a softening demand outlook. Gold eased 0.55 percent to 4,084.40 dollars an ounce and the US 10-year Treasury yield fell about 6 basis points to 4.684 percent.

Gulf markets shrugged off the oil drop. Dubai’s DFM General Index led with a 1.42 percent gain to 5,878.49 and Kuwait’s All Share rose 1.33 percent to 8,913.85, while Saudi Arabia’s Tadawul added 1.10 percent to 10,823.62 and the MSCI Tadawul 30 0.82 percent to 1,449.86, per the exchanges. Qatar’s QE Index rose 0.83 percent to 10,133.67, Oman’s MSX 30 added 0.73 percent to 7,349.07, Kuwait’s Premier Market 0.55 percent to 9,312.08 and Abu Dhabi’s FADGI 0.26 percent to 9,940.83. Bahrain’s All Share eased 0.07 percent to 1,956.70, the only Gulf benchmark lower.

In Egypt, the benchmark EGX30 eased 0.35 percent to 54,094.33, giving back part of the previous session’s gain, while Jordan’s Amman bourse slipped 0.33 percent to 3,999.44. Egyptian markets traded normally after an early-morning earthquake near Suez that caused no reported casualties or damage, per the authorities.

In currencies and crypto, the dollar was mixed and the Egyptian pound firmed further. The euro held at 1.1519 and sterling eased 0.22 percent to 1.3450, while the yen strengthened 0.72 percent to 156.43 per dollar, per CNBC. The Egyptian pound firmed 0.40 percent to 50.10 per dollar, extending its move below the 51 line, while the Kuwaiti dinar held near 0.3077. Bitcoin eased 0.28 percent to about 63,148 dollars.

Further west, Friday’s closes from our US-Europe wrap remain the last full prints: the Nasdaq Composite rose 1.00 percent to 25,373.85, the S&P 500 0.70 percent and the Dow Jones Industrial Average 0.53 percent, while in Europe the CAC 40 and Euro Stoxx 50 firmed and the FTSE 100 eased. Monday’s Western session opened with energy shares under pressure from the slide in oil, our reading.

Why it matters: The session showed Gulf equities decoupling from a sharp fall in oil, our reading. The OPEC+ decision to raise September output pressured crude, but regional markets read the move as a sign of confidence in demand and the completion of the group’s supply-cut unwind rather than a threat, and most Gulf benchmarks rose. Lower oil trims the near-term revenue math for producers such as Saudi Arabia, Kuwait, the UAE and Oman, though the drop also eases the import bill for Egypt and Jordan and sits alongside a firmer Egyptian pound. The pullback in Korea, meanwhile, is a reminder of how far and how fast last week’s chip rally had run.

Outlook: The immediate markers are whether oil stabilises after the OPEC+ increase or extends its slide, and how Gulf markets hold up if crude stays under pressure, our reading. Global risk appetite will turn on whether Asia’s technology names steady after Korea’s drop and on the run of US data into Friday’s jobs report, while the Egyptian pound’s path below 51 remains the currency marker to watch.

Table – MENA and Asia equities, 3 August close, ranked by change:

Table – US and Europe, Friday 31 July close, for reference, ranked by change:

Table – Commodities, intraday 3 August, ranked by change:

Table – Currencies, rates, volatility and crypto, intraday 3 August, ranked by percent change:

Sources: Saudi Exchange; Boursa Kuwait; Qatar Stock Exchange; Bahrain Bourse; Muscat Stock Exchange; Amman Stock Exchange; Egyptian Exchange; Abu Dhabi Securities Exchange; Dubai Financial Market; CNBC.

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