Market Wrap MENA-Asia 30 July: Gulf Firms on Oil as China and Korea Retreat

By The Edge Research Team

Asian markets were mostly softer on Thursday as the region digested a hawkish hold from the US Federal Reserve and a sharp Wall Street selloff, while oil held near 90 dollars after its surge and Gulf bourses firmed on the stronger crude bid. Chinese and South Korean shares led the declines, with the Shenzhen Component down 2.73 percent and the Kospi down 1.23 percent, while Japan’s Nikkei, Hong Kong and India advanced, per CNBC. Most Gulf markets rose, led by Saudi Arabia and Abu Dhabi, while the Egyptian pound eased past the 51 line to the dollar.

Asia’s session was split. Mainland China and South Korea led the losses, the Shenzhen Component falling 2.73 percent to 13,285.80 and the Shanghai Composite 0.62 percent to 3,804.69, while South Korea’s Kospi eased 1.23 percent to 5,593.56 and the Kosdaq 2.70 percent to 644.78, per CNBC. The other side of the map firmed: Japan’s Nikkei 225 rose 0.71 percent to 61,867.43, Hong Kong’s Hang Seng added 0.20 percent to 25,858.88 and India’s Nifty 50 gained 0.28 percent, while Australia’s ASX 200 fell 0.78 percent, Singapore’s Straits Times 0.69 percent and Taiwan’s Taiex 0.26 percent.

Oil eased modestly but held its ground near 90 dollars after the previous session’s surge. Brent crude traded at 90.16 dollars a barrel, down about 0.64 percent, and West Texas Intermediate at 83.70 dollars, off 0.90 percent, per CNBC, as the market consolidated the security premium added when the Middle East conflict reignited. Gold rose 0.96 percent to 4,074.90 dollars and the volatility index cooled 7.26 percent to 19.16 after spiking on Wednesday, a partial unwind of the risk-off tone, our reading.

Gulf markets were mostly firmer, supported by the stronger oil bid. Saudi Arabia’s Tadawul All Share Index rose 0.43 percent to 10,589.72 and the MT30 added 0.80 percent to 1,423.43, while Abu Dhabi’s FADGI gained 0.40 percent to 9,878.82, per the exchanges. Kuwait advanced, the Premier Market Index up 0.27 percent to 9,215.48 and the All Share 0.17 percent to 8,756.68, and Jordan’s Amman bourse rose 0.44 percent to 3,996.13. Elsewhere the moves were slight: Dubai’s DFM General Index eased 0.08 percent to 5,792.16, Oman’s MSX 30 slipped 0.06 percent to 7,277.20 and Bahrain’s All Share edged down 0.18 percent to 1,956.33. Qatar’s QE Index was the regional laggard, down 0.86 percent to 9,920.69 as heavyweight banks retreated.

In Egypt, the benchmark EGX30 eased 0.35 percent to 53,442.20 as decliners outnumbered gainers, per CNBC, while the pound weakened past a symbolic threshold against the dollar. The move keeps Cairo’s external picture in focus, with a heavier oil import bill weighing even as a broadly softer dollar offers a partial offset.

In currencies and crypto, the dollar was little changed and the Egyptian pound weakened. The euro held at 1.1465 and sterling at 1.3376, while the yen firmed 0.22 percent to 163.02 per dollar, per CNBC. The Egyptian pound slipped 0.99 percent to 51.12 per dollar, easing past the 51 line for the first time in recent sessions, while the Kuwaiti dinar held near 0.3077. Bitcoin rose 1.26 percent to about 64,581 dollars.

Further west, Wednesday’s closes from our US-Europe wrap remain the last full prints: the Dow fell 2.19 percent to 51,594.14, the S&P 500 dropped 1.52 percent to 7,316.15 and the Nasdaq 1.74 percent to 24,442.94 after the Federal Reserve held rates with three hawkish dissents, while in Europe the FTSE 100 rose 0.34 percent to 10,908.41 as the rest of the region eased. Thursday’s European session was rebounding by mid-afternoon, the CAC 40 up about 1 percent and the DAX and FTSE higher, and US equity futures pointed to a bounce, with S&P futures up about 0.6 percent and Nasdaq futures up about 1.3 percent, per CNBC.

Why it matters: The region is caught between a firmer oil bid that supports Gulf producers and a hawkish turn from the major central banks that has lifted global yields and pressured risk assets, our reading. For producers such as Saudi Arabia, Kuwait, the UAE and Qatar, crude near 90 dollars underpins the revenue outlook and helped most Gulf bourses hold their gains even as global risk sentiment stayed cautious. For Egypt, the pound’s move past 51 to the dollar, alongside a heavier oil import bill, tightens the external picture, though a broadly softer dollar and resilient local equities offer a modest offset.

Outlook: The immediate markers are whether oil holds its post-conflict gains near 90 dollars, whether the regional escalation flares again, and how Gulf and Egyptian markets absorb the higher-for-longer rate signal from the Fed and the Bank of England, our reading. The Egyptian pound’s path around the 51 line is the currency marker to watch.

MENA and Asia equities, 30 July close, ranked by change

US and Europe, Wednesday 29 July closes, for reference, ranked by change

Commodities, rates, volatility, FX and crypto, intraday 30 July

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

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