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Gulf stocks slump following oil crash on Covid variant concerns

By Mensholong Lepcha


Updated

Social distancing markers on seats at the Dubai Airport
Social distancing markers on seats at the Dubai Airport – Photo: Shutterstock

Stock markets in the Gulf slumped on Sunday after oil prices crashed last week on concerns over the new Omicron Covid-19 variant derailing global economic recovery. 

Oil prices fell over 10% on Friday to see its worst day since April 2020 amid a sell-off in risk assets across the globe.

Saudi Arabia’s benchmark Tadawul All Share Index on Sunday saw its worst intraday percentage fall since early May 2020, down 4.5%. Most stock markets in the Gulf operate from Sunday to Thursday.

Gulf stocks slump on Sunday

Petro-firms Rabigh Refining & Petrochemical and Saudi Kayan Petrochemical were the top two losers on the Saudi benchmark index, down over nearly 10% each.

“Commodity markets suffered a volatile week as mixed economic data and concerns about a new COVID-19 variant saw big shifts in sentiment. The huge selloff on Friday left the market on fragile ground coming into a new week,” said ANZ Research in a note.

US500

4,561.50 Price
+0.230% 1D Chg, %
Long position overnight fee -0.0262%
Short position overnight fee 0.0040%
Overnight fee time 22:00 (UTC)
Spread 0.7

US30

35,468.70 Price
+0.370% 1D Chg, %
Long position overnight fee -0.0262%
Short position overnight fee 0.0040%
Overnight fee time 22:00 (UTC)
Spread 2.2

HK50

17,358.10 Price
-0.620% 1D Chg, %
Long position overnight fee -0.0261%
Short position overnight fee 0.0042%
Overnight fee time 22:00 (UTC)
Spread 5.0

DE40

15,990.00 Price
+0.190% 1D Chg, %
Long position overnight fee -0.0221%
Short position overnight fee -0.0001%
Overnight fee time 22:00 (UTC)
Spread 1.5

In Doha, benchmark QE General Index closed 2.8% lower on Sunday. Losses were broad-based with construction firm Investment Holding Group and lender Commercial Bank of Qatar falling over 4% each to emerge among the top drags on the index.

Uncertainties

Elsewhere, Dubai’s benchmark Dubai Financial Market General Index tumbled over 5% on Sunday.

“Initial reports suggest that symptoms from the Omicron variant are mild, but there are still question marks around how effective current vaccines will be against this latest variant,” said Warren Patterson and Wenyu Yao of ING.

“According to reports this morning, it will be another two weeks or so before BioNTech will have some more scientific evidence on the new omicron variant that will inform how governments around the world may react to this new omicron variant,” Robert Carnell of ING added. 

Read more: Omicron Covid-19 variant sets off strong market reaction

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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