Regional stock markets were down Monday and oil prices dropped to their lowest levels in five weeks as investors continued to lose faith in prospects for an early economic -recovery.
US crude dipped as low as US$63.75 Monday, roughly 4 per cent below its level on Thursday, when markets closed for the US Independence Day holiday.
"This could be a correction from overheated expectations of an economic recovery," JBC Energy of -Vienna said in a research note.
Equity markets in the oil-rich Gulf also suffered as crude prices slipped. The Dubai Financial Market (DFM), which closed down 3.6 per cent at 1756.16 on Sunday, dropped another 2.01 per cent Monday. The Abu Dhabi Securities Exchange General Index dropped 0.44 per cent Monday to end at 2,625.47, after a fall of 1.3 per cent the previous day.
Elsewhere in the region, the Saudi Tadawul exchange closed 1.6 per cent lower than the day before. The Kuwaiti stock index was down 3.64 per cent, while Qatari shares ended down 1.4 per cent and the stock market in Bahrain lost 1.05 per cent.
"The price of oil is a major indicator for the region," said Chahir Hosni, an equity sales manager at the Egyptian investment bank EFG-Hermes. "GCC markets are pretty well correlated with the commodity prices, especially oil, and it is visibly weighing on the equities here."
Faltering equities and a strengthening US dollar have helped push commodity prices down across the board in recent days, continuing the slide triggered last week by the release of weak economic figures from the US and Europe.
Stefano Vincelli, an equities and derivatives trader from Halifax Investments in Sydney, told Reuters: "Two major pieces of data will be remembered from the past week: the UK economy shrank by 2.4 per cent, the biggest contraction since 1958, and the unemployment figure from the US, which hit a 26-year high of 9.5 per cent.
Overall, the supply and demand picture for crude is still a bearish number."
Michael Wittner, the global head of oil research at Société Générale, said recent price support for crude, based largely on economic optimism, had faded for now. He predicted crude would continue to slide, to average about $60 per barrel this month.
Crude has fallen by more than $10 in less than two weeks from an eight-month high of $73.38, after new signals that the economy in the world's biggest energy consumer was continuing to struggle. The latest drop came after a six-month -rally that saw prices more than double from $33 a barrel in late December, after falling from a record peak of $147 a year ago.
The region's stock markets, meanwhile, have seen an early summer rally erode. Ali Khan, the managing director at Arqaam Capital in -Dubai, said: "We have seen some weak trading on low volumes last week and the trend is expected to continue in the short term.
"All eyes are fixed on second-quarter earnings reports by UAE firms," Mr Khan said. "Investors traditionally sit on the fence before earnings season, and that also explains low volumes."
Oil market volatility over the past year has reached levels comparable to the energy shocks of the late 1970s and early 1980s, according to Costanza Jacazio, an energy analyst at Barclays Capital in New York.
The gyrations have had major -effects on the world economy, with last year's price leap stoking inflation and contributing to the economic crash that has reduced -global demand for all kinds of goods and assets. Crude's recent rebound has unnerved the governments of energy-consuming nations, leading EU officials to warn last month that "the 2008 bubble could be -repeated".
OPEC members are just as fearful of a replay of last year's price crash, which could slash state revenues and delay investment in oil projects further.
The Centre for Global Energy Studies, a London-based consulting group founded by Sheikh Ahmed Zaki Yamani, the former Saudi oil minister, said in a recent report that neither OPEC nor its key members "has any real interest in halting the rise in oil prices".
* with agencies
tcarlisle@thenational.ae
skhan@thenational.ae
MATCH INFO
Uefa Champions League last-16, second leg:
Real Madrid 1 (Asensio 70'), Ajax 4 (Ziyech 7', Neres 18', Tadic 62', Schone 72')
Ajax win 5-3 on aggregate
Director: Laxman Utekar
Cast: Vicky Kaushal, Akshaye Khanna, Diana Penty, Vineet Kumar Singh, Rashmika Mandanna
Rating: 1/5
COMPANY PROFILE
Name: HyperSpace
Started: 2020
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
Based: Dubai, UAE
Sector: Entertainment
Number of staff: 210
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
Auron Mein Kahan Dum Tha
Starring: Ajay Devgn, Tabu, Shantanu Maheshwari, Jimmy Shergill, Saiee Manjrekar
Director: Neeraj Pandey
Rating: 2.5/5
Ticket prices
General admission Dh295 (under-three free)
Buy a four-person Family & Friends ticket and pay for only three tickets, so the fourth family member is free
Buy tickets at: wbworldabudhabi.com/en/tickets
Killing of Qassem Suleimani
FFP EXPLAINED
What is Financial Fair Play?
Introduced in 2011 by Uefa, European football’s governing body, it demands that clubs live within their means. Chiefly, spend within their income and not make substantial losses.
What the rules dictate?
The second phase of its implementation limits losses to €30 million (Dh136m) over three seasons. Extra expenditure is permitted for investment in sustainable areas (youth academies, stadium development, etc). Money provided by owners is not viewed as income. Revenue from “related parties” to those owners is assessed by Uefa's “financial control body” to be sure it is a fair value, or in line with market prices.
What are the penalties?
There are a number of punishments, including fines, a loss of prize money or having to reduce squad size for European competition – as happened to PSG in 2014. There is even the threat of a competition ban, which could in theory lead to PSG’s suspension from the Uefa Champions League.
COMPANY%20PROFILE
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The alternatives
• Founded in 2014, Telr is a payment aggregator and gateway with an office in Silicon Oasis. It’s e-commerce entry plan costs Dh349 monthly (plus VAT). QR codes direct customers to an online payment page and merchants can generate payments through messaging apps.
• Business Bay’s Pallapay claims 40,000-plus active merchants who can invoice customers and receive payment by card. Fees range from 1.99 per cent plus Dh1 per transaction depending on payment method and location, such as online or via UAE mobile.
• Tap started in May 2013 in Kuwait, allowing Middle East businesses to bill, accept, receive and make payments online “easier, faster and smoother” via goSell and goCollect. It supports more than 10,000 merchants. Monthly fees range from US$65-100, plus card charges of 2.75-3.75 per cent and Dh1.2 per sale.
• 2checkout’s “all-in-one payment gateway and merchant account” accepts payments in 200-plus markets for 2.4-3.9 per cent, plus a Dh1.2-Dh1.8 currency conversion charge. The US provider processes online shop and mobile transactions and has 17,000-plus active digital commerce users.
• PayPal is probably the best-known online goods payment method - usually used for eBay purchases - but can be used to receive funds, providing everyone’s signed up. Costs from 2.9 per cent plus Dh1.2 per transaction.
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Abu Dhabi traffic facts
Drivers in Abu Dhabi spend 10 per cent longer in congested conditions than they would on a free-flowing road
The highest volume of traffic on the roads is found between 7am and 8am on a Sunday.
Travelling before 7am on a Sunday could save up to four hours per year on a 30-minute commute.
The day was the least congestion in Abu Dhabi in 2019 was Tuesday, August 13.
The highest levels of traffic were found on Sunday, November 10.
Drivers in Abu Dhabi lost 41 hours spent in traffic jams in rush hour during 2019
The biogs
Name: Zinah Madi
Occupation: Co-founder of Dots and links
Nationality: Syrian
Family: Married, Mother of Tala, 18, Sharif, 14, Kareem, 2
Favourite Quote: “There is only one way to succeed in anything, and that is to give it everything.”
Name: Razan Nabulsi
Occupation: Co-founder of Dots and Links
Nationality: Jordanian
Family: Married, Mother of Yahya, 3.5
Favourite Quote: A Chinese proverb that says: “Be not afraid of moving slowly, be afraid only of standing still.”
In numbers
Number of Chinese tourists coming to UAE in 2017 was... 1.3m
Alibaba’s new ‘Tech Town’ in Dubai is worth... $600m
China’s investment in the MIddle East in 2016 was... $29.5bn
The world’s most valuable start-up in 2018, TikTok, is valued at... $75bn
Boost to the UAE economy of 5G connectivity will be... $269bn