Gulf markets give mixed response to oil price dip

The recent dip in oil prices has prompted the usual drop in equity markets across the Gulf, but bond markets have fared better. In fact, spreads on the region’s dollar bond have actually narrowed over the past month. Despite a small rally yesterday, oil prices are still down since the start of this month – they currently stand at just over US$52pb, compared with US$56pb in early March. Given the Gulf’s heavy reliance on hydrocarbon revenues, movements in oil prices tend to have a major influence on the performance of the region’s financial markets. But the response to this recent dip in oil prices has been somewhat mixed. • As is usually the case, lower oil prices have weighed on the region’s equity markets. The MSCI GCC Index has fallen by 3.5% over the past month, lagging behind equity markets in the rest of the emerging world – the MSCI Emerging Markets has risen by more than 3% over the same period. The worst performer has been Dubai’s equity market, while stocks in Kuwait resumed their rally since the start of the year.