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Gulf stocks rise following U.S. labor market data

Xinhua, August 7, 2016 Adjust font size:

Stock exchanges from Kuwait to Oman posted modest gains Sunday after the United States' Department of Labor said on Friday they created 255,000 jobs in July, superseding the forecasted 180,000 by economists.

Following the U.S. market gains last Friday with the bellwether index Dow Jones Industrial in New York advancing by 1.04 percent, Saudi Arabia's Tadawul stock exchange closed 0.69 percent higher on Sunday.

"Saudi Arabia's non-oil sector activity grew to an eight-month high, with purchasing managers index rising to 56 in July owing to a substantial increase in output - the quickest expansion rate since September 2015," said the Dubai-based economist Nasser Saidi in his weekly market analysis.

After hitting a four-month low at less than 30 U.S. dollars a barrel, or 159 liters, the price of U.S. crude oil stabilized at 42 dollars a barrel following the U.S. labor market news, hence improving e-Gulf Arab trading tendencies.

In addition, Saudi's bellwether share, Sabic, the world's largest petrochemical producer, rose by 0.80 percent. Dubai's market index DFMGI rose up by 1.12 percent, and the Gulf General Investment Company's (GGICO) shares reached a three-week-high at 0.15 U.S. cents.

Dubai's sister market in the United Arab Emirates (UAE) capital of Abu Dhabi, ADX, gained 0.43 percent, while Kuwait's KSE Market Index advanced by 0.59 percent.

Saidi said that due to the ongoing oil slump, "the World Bank estimates that six Gulf Arab countries lost 157 billion dollars in oil revenues last year and are expected to lose another 100 billion in 2016."

At its current level, the "black gold" is still trading far below its 2014-high price of 110 dollars a barrel.

Nevertheless, the U.S.' Standard and Poor (S&P) rating agency said earlier this month, "the Abu Dhabi government's large asset position continues to provide a considerable buffer mitigating the volatile commodity market impact upon the economy."

The agency affirmed Abu Dhabi's investment grade at "AA" long-term and "A-1+" short-term foreign and local currency credit ratings with a stable outlook.

"AA" means that the issuer has a rather low default probability and is a notch below S&P's highest possible rating of "AAA."

The MSM30 Index in Muscat, Oman, also closed 0.08 percent higher. Endit