Arab Today, arab today stock markets on the edge
Last Updated : GMT 06:53:52
Arab Today, arab today
Arab Today, arab today

Stock markets on the edge

Arab Today, arab today

Arab Today, arab today Stock markets on the edge

Abu Dhabi - Arabstoday

The region\'s stock markets are likely to trade sharply lower in the week ahead following credit rating agency Standard & Poor\'s (S&P) move to strip the US of its prized AAA credit rating, international oil prices coming off their recent highs due to headwinds facing major world economies and mounting sovereign debt concerns in Europe. S&P downgraded the US credit rating for the first time since 1941, lowering it one level to AA+ while keeping the outlook at ‘negative.\' The move stoked fears the borrowing costs for the world\'s largest economy currently grappling a slowdown in growth are going to increase which may send the country and the global economy spiralling back into recession. There is now a risk of a bigger sell-off in world markets in the coming days, following one of the worst weeks for equities since 2008. Article continues below Stocks in Saudi Arabia, the only Gulf Arab bourse open on Saturdays, tumbled for a third day yesterday, sending the benchmark index to its largest intraday drop since March. Steepest decline The 147-company Tadawul All Share Index slumped 5.9 per cent to 6,041.01, the steepest intraday decline since March 1, at 12.41pm in Riyadh. All 15 industry groups fell. The index has fallen 11 per cent from the year-high of 6,786.03 on May 22. Saudi Basic Industries, the world\'s biggest petrochemicals maker, dropped the most in two months. Al Rajhi Bank, the kingdom\'s largest publicly traded lender by market value, reached its lowest intraday price since March. To avoid a downgrade, S&P said the United States needed to not only raise the debt ceiling, but also develop a ‘credible\' plan to tackle the nation\'s long-term debt. In its report on Friday, S&P ruled that the US fell short. \"The Saudi market is reacting to the steep declines in global markets over the weekend,\" Asim Bukhtiar, an equity analyst at Riyad Capital told Bloomberg. \"Growing concerns of the US relapsing into recession are driving sentiment.\" \"At this point, the impact of the ratings downgrade is not evident,\" said Bukhtiar. \"Regional markets will take their cue from global markets on Monday when they open.\" US stocks fell the most in 32 months last week and European stocks posted their biggest weekly loss since November 2008. The S&P 500 slumped 7.2 per cent, the biggest weekly drop since November 2008. The Stoxx 600 Europe Index tumbled 9.9 per cent to 238.88 this past week, the gauge\'s lowest level in 13 months. Oil tumbled 9.2 per cent last week, the biggest drop since the week ended May 6. Crude for September delivery was settled at $86.88 (Dh319) a barrel on the New York Mercantile Exchange. Saudi Arabia holds 20 per cent of the world\'s proven oil reserves.  

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