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Gulf markets slip on fears of second wave

RIYADH: In this file photo, a Saudi investor monitors the Saudi Stock Exchange (Tadawul).All major Gulf markets fell yesterday in line with oil and global stocks as growing fears of a second wave of coronavirus infections revived economic worries. — AFP

DUBAI/LONDON: All major Gulf markets fell yesterday in line with oil and global stocks as growing fears of a second wave of coronavirus infections revived economic worries. Saudi Arabia’s benchmark index eased 0.4 percent, with National Commercial Bank, the kingdom’s largest lender, dropping 1.4 percent and Al-Rajhi Bank  down 0.3 percent. State-owned Saudi Aramco was down 0.2 percent.

Global equities tumbled yesterday extending last week’s losses on fears of a second wave of virus infections around the world that could put the brakes on the easing of lockdowns and a budding economic recovery.

On Sunday, the oil giant bought 2.1 billion shares of Saudi Basic Industries (SABIC) on the stock market, completing a deal to buy 70 percent of the petrochemical giant, according to sources and market data. SABIC traded 0.3 percent lower. The benchmark index in Dubai, the United Arab Emirates’ business and tourism hub, was 1.2 percent lower, weighed down by a 1.8 percent fall in Emaar Properties and a 1.6 percent drop in Dubai Islamic Bank. The Abu Dhabi index slipped 0.5 percent, with top lender First Abu Dhabi Bank easing 1.8 percent.

The Qatari index lost 0.7 percent, with Qatar Islamic Bank shedding 1.8 percent and petrochemical firm Industries Qatar down 1.2 percent.

Brent crude futures were $1.02, or 2.6 percent lower, at$37.71 a barrel by 0750 GMT, as new coronavirus infections hit China and the United States, raising the prospect that renewed outbreaks could weigh on the recovery of fuel demand.

While European nations press ahead with their reopening after months of strict shutdowns, there are signs that the deadly disease is coming back in China and seeing a resurgence in the United States too.

European stock markets lost more than two percent in opening deals yesterday, as investors fretted over a second wave of coronavirus infections that could derail economic recovery. In initial trade, London’s benchmark FTSE 100 index of blue-chip companies slid 2.2 percent to 5,970.86 points.

In the eurozone, Frankfurt’s DAX 30 index sank 2.7 percent to 11,630.85 points and the Paris CAC 40 also lost 2.7 percent to 4,707.04. Milan’s FTSE Mib shed 2.7 percent to 18,386.29 and Madrid’s IBEX 35 dropped almost 3.0 percent to 7,077.10 points.  “Investors are waking up to the threat of a second wave and the damage that it could cause to the global economic recovery,” said City Index analyst Fiona Cincotta.

The worrying figures will provide a test for stock markets, which have soared up to 50 percent from their March troughs thanks to the lifting of stay-at-home orders and trillions of dollars of stimulus and central bank backstopping.

Beijing has carried out mass testing and locked down several neighborhoods after 75 cases were linked to a single wholesale food market in the capital. City official Li Junjie said yesterday that cases had also been found at another market.

 “It means the virus hasn’t lost its infectiousness, it isn’t weakening… we shouldn’t let down our guard,” World Health Organization deputy director Ranieri Guerra told Italian journalists.

AxiCorp’s Stephen Innes said in a note: “Falling infection rates have provided investors the confidence that the lockdown approach was working, allowing equity investors to look forward to 2021 as impressive monetary and fiscal policy provide a post-pandemic bridge.” “However, rising new daily COVID-19 cases in two of the three most populous states in the US will test that resolve.”

Reopening borders

Tokyo tumbled 3.5 percent and Seoul sank 4.8 percent, while Hong Kong, Sydney, Singapore, Mumbai and Bangkok were all down more than two percent. Shanghai was one percent off, Manila also lost 4.8 percent and Taipei slipped 1.1 percent, with Wellington off 0.4 percent. London, Paris and Frankfurt all lost more than two percent at the start of trade. Still, there is hope for the recovery in Europe, with Germany, Belgium, France and Greece opening their borders to EU countries from yesterday. Austria will follow today while Spain said it will do so on June 21.

Oil prices extended last week’s losses on fears that a second wave could lead to new lockdowns and hit demand for the commodity again. Traders are also keeping tabs on a technical meeting of key producers led by Russia and Saudi Arabia, with a panel discussing output cuts. – Agencies

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