Omani Stock Market Nosedives for Third Consecutive Week, Approaching Yearly Lows Amidst Economic Uncertainties

Omani Stock Market Nosedives for Third Consecutive Week, Approaching Yearly Lows Amidst Economic Uncertainties

The Omani stock market has been on a downward spiral for the third consecutive week, dropping below previous resistance levels and potentially heading towards its lowest point this year. The market has been witnessing significant volatility and might face additional selling pressure if it breaches below support levels. The sectors of finance, industry, and services have experienced notable declines, with only a handful of stocks recording a positive performance.

The main index fell despite increased trading volumes and value, owing to negative sentiment, particularly in response to the Federal Reserve’s interest rate meeting. The US central bank has signaled its intent to maintain high-interest rates for an extended period, tightening the monetary policy that could have adverse impacts on the Omani stock market and the broader economy. Traders are expected to keep an eye on new economic data to predict potential shifts in monetary policy.

Monetary Policy and Its Impact on Omani Banks

While loan volumes in Oman’s banks are on the rise, the strict monetary policy could suppress demand as financing costs may remain high for a longer duration. This situation could potentially pose medium-term risks for Omani banks. However, the rising oil market could offer some reprieve for the stock market, as prices are anticipated to continue their upward trend due to tight supply levels.

Performance Parallels in Other Markets

Senior Market Analyst at XTB, Hani Abuagla, noted that the performance of the Omani stock market mirrors that of other markets. Stocks have also taken a dip in the US and Europe. The Saudi stock market had a negative week, while the Abu Dhabi and Qatar stock markets traded sideways. The Dubai stock market, however, rebounded robustly.

Uniform Sectoral Decline

All sectors of the Omani stock market saw a uniform decline during the week. The industry sector bore the most significant impact, recording losses nearly double those of the financial and services sectors. Trading volumes and liquidity significantly diminished compared to the previous week as traders pulled back from the market. This decrease in trading activity could potentially exert further downward pressure on prices.

Global Economic Concerns Influence Sentiment

The prevailing sentiment in the Omani stock market was influenced by concerns about global economic conditions and monetary policy. Investors turned their attention to developments in China and the United States as new economic data fueled volatility and uncertainty. Favorable job market and non-manufacturing activity data in the United States raised concerns that the Federal Reserve might maintain its aggressive monetary policy. This data strengthened the case for higher interest rates, impacting investors’ risk appetite.