Thursday 13 / March / 2025
Muscat: The Omani stock market has accumulated losses this week as sentiment deteriorated on the local and global stage with investors looking into the various issues and developments in the country and the US in particular.
“From the banking sector's worries to the debt ceiling and changing monetary policy, investors had a lot to take into account,” said Ahmed Negm Head of Market Research MENA at XS.com.
Energy markets were also volatile and moved to a less optimistic outlook, creating some concerns over an impact on the local stock market. “On a local scale, the market has seen the publication of mitigated company earnings reports, which eroded confidence to a certain extent and contributed to the concerns that the Omani economy could be seeing a wider impact,” he further added.
At the same time, US inflation data has consolidated investors’ expectations regarding the direction of the monetary policy. Interest rates are expected to remain on hold for the moment, which could translate into less upward pressures on financing costs in Oman and other countries with pegged currencies, Ahmed Negm said. “This stabilisation could alleviate some pressures for companies and households alike and could create some breathing room for the economy, which could, in turn, provide some support to the Muscat stock market, helping limit losses over time,” he added.
Additionally, investors the world over are monitoring the discussion in the US around the debt ceiling issue while the possibility of the country defaulting on its obligations becomes more palpable. Such an event could have wide-reaching consequences and could impact banks and economies in the region. While the US government is expected to come to a deal before an effective default, the approaching deadline is fuelling concerns and is pushing some investors away from international markets like Oman while they look for safety. “Such a trend could squeeze liquidity levels on the market and put downward pressures on Omani stocks,” Ahmed Negm said.
Moreover, the Chinese economic recovery has been weaker than expected, leading to some concerns about the demand for energy and oil in particular. The subdued recovery in China in addition to the slowing US economy could dampen exports from oil-producing countries, impacting public finances and companies earnings over the medium to long term in Oman and other countries in the region. “In this regard, oil markets have recorded significant volatility this week and have ended up declining, nearing the 70 dollars per barrel mark. Crude prices could remain under pressure this month while traders wait for the next OPEC meeting for more indications regarding any changes in production levels,” Ahmed Negm said.
Despite this week’s losses, the Omani stock market could see an improvement in risk appetite with investors returning to buy the dip after the strong price corrections the main index recorded since mid-March, Ahmed Negm said. “However, this could be conditioned by the developments on the local and global stage as traders assess market conditions. New data releases are expected next week for most major economies and could also affect the direction of the market,” he added.
