Omani stock market could see stronger performances

Muscat: The Omani stock market recorded a volatile although short week of trading. The main index remained around the same price levels observed during the previous week with traders considering local and global factors amid an ongoing and mitigated earnings season, according to an analyst.

“The market could remain in an uncertain direction after its surge last month and could continue stagnating for the first few days of the week as traders await the Federal Reserve’s interest rate decision on Wednesday,” Farah Mourad, XTB Market Analyst.

The US central bank is expected to raise its interest rates another time after it decided to skip hiking during its previous meeting. The slowdown in inflation in the US has fuelled expectations of an end to the interest rate hike cycle which could help improve sentiment among investors and fuel appetite for investment opportunities in global markets and among them the Omani stock market. As a result, traders could remain cautious before the Federal Reserve decision, she said.

This decision and the comments of the president of the US central bank could affect the Omani financial sector and the broader economy which have been seeing increasing financing costs for some time and some pressure on business activity. “While interest rates could stabilise and eventually decline progressively, the Omani stock market could see stronger performances and could build a clearer uptrend. The market has been mostly trading horizontally since the end of last year,” Farah Mourad said.

The financial sector could continue to see positive performances in the meantime despite a slight decline this week thanks to growing loan volumes. Credit continued to increase although at a slightly slower pace than during the previous month and below this year’s peak. “This trend could help most banking stocks extend their gains with Bank Muscat and National Bank of Oman testing their previous peaks,” Farah Mourad said.

However, the market could remain exposed to the volatility in energy markets. While oil prices have been improving since the beginning of the month, the market recorded increased volatility and uncertainty with concerns over demand levels returning to the forefront. “The Chinese economic expectations could continue to impact the market while traders monitor crude inventory drawdowns which were weaker than expected in the US,” Farah Mourad said.