DUBAI May 28 Gulf stock markets may have a soft
tone in thin trade on Sunday after global oil producers agreed
after the close on Thursday to extend cuts in output by nine
months to March 2018.
The deal removes uncertainty and may put a floor under oil
prices at around $50 a barrel for Brent, which could
allow Gulf governments including Riyadh to spend a little more
on economic growth this year.
"While the cuts will continue to trim headline GDP growth in
the Gulf this year, the boost to oil export receipts should
allow austerity to be eased further, supporting stronger growth
in non-oil sectors," London-based Capital Economics said in a
However, many in the markets had been hoping for stronger
action to push up oil prices, such as a deal to deepen the
production cuts or extend them further until mid-2018.
So Brent dropped by more than 4 percent to as low as $51.03
a barrel after the deal was announced, although it has since
come back to $52.15.
Low trading volumes on most Gulf bourses in recent weeks may
shrink further due to the start of the holy month of Ramadan and
because of a general lack of positive corporate news.
Kuwait's Agility may attract interest after it
said it had agreed to pay $95 million in cash to settle a civil
lawsuit accusing it of defrauding the United States military on
food supply contracts. This follows the earlier settlement of
the parallel criminal portion of the case involving more than
$8.6 billion of contracts.
The deal resolves all legal issues related to the contracts
for Agility staff, directors, officers and affiliates, it said,
adding that the settlement would allow Agility to once again
pursue new U.S. government contracts.
Rising diplomatic tensions between Qatar and other Gulf Arab
states have so far showed no clear sign of hurting the Qatari
market, but regional investros could become more cautious about
investing if the dispute drags on.
Saudi Arabia and the United Arab Emirates signalled
frustration with Qatar last week after its state media published
purported remarks by Qatari Emir Tamim bin Hamad al-Thani
criticising Gulf rhetoric against Iran and suggesting tensions
between the emir and U.S. President Donald Trump.
Qatar said the remarks, published late on Tuesday, were fake
and that the news agency that ran them had been hacked in an
apparent attempt to misrepresent Sheikh Tamim's views. But Gulf
Arab countries including Saudi Arabia allowed their state-backed
media to run them, infuriating Doha and triggering a war of
words in regional media.
(Reporting by Andrew Torchia)