Saudi shares dropped 5.5 percent to their lowest close in nearly five months, weighed by petrochemical and banking shares. The market slump followed global ques and decline of indexes across the boards. Additional source of concern is the S&P’s downgrade of the United States’ credit rating.
The index of the largest Arab bourse fall to 6,073 points, its lowest close since March 16, after suffering its biggest daily decline since March 1. The benchmark has lost 8.3 percent this year.
The Saudi market is solid, but unlike Dubai and Abu Dhabi bourses it is correlated to U.S. and European debt. The bourse is expected to see fluctuations in the coming week, according to the local market analysts.
Within the last nine trading days, the U.S. Stock Market, and specifically the S&P 500 Index, appears to be in a meltdown phase.
It seems, most of the caustic fundamental news had filtered into the market during the past 9 trading sessions, but last Thursday’s sell-off worldwide remains extreme. The reason for it is a combination of dynamic trading profiles taking place at the same time.
In general, buying has dried up. Traders and investors who had been long for a period of time, during the last several months, and had not booked partial profits prior to the last few days, are now doing so in a panic. In addition, once the Institutional traders smelled default they added to the selling pressure to flush out “weak” longs. Traders have not yet begun to buy back their positions for profit, as they are letting the correction to bottom out.
The big question is where does the sell-off stop? There may be much more to come in as downside pressure, toward the end of the year. However, during the late trading hours on Thursday and most of the session on Friday the charts reflected the confused market players’ sentiment.
It is very possible the U.S. markets to bounces temporarily, as panic fades.
Potential buyers should get advantage on the opportunity and go on a bargain hunt at this moment.
