DUBAI: Saudi Arabia’s stock market edged down in early trade on Tuesday after oil prices slipped and Standard and Poor’s revised to negative its outlook on the kingdom’s credit rating.
Brent crude dropped 1.2 percent to $57.63 per barrel by 0835 GMT as the International Energy Agency said the United States would remain the world’s top source of oil supply growth until 2020, defying expectations of a more dramatic slowdown in shale output growth.
Also, China’s consumer inflation, which came in at a five-year low for January, raised worries about oil demand in the world’s second-largest economy, which is also a major consumer of petrochemicals produced in the Gulf.
The main Saudi stock index fell 0.6 percent as petrochemicals major Saudi Basic Industries lost 1.0 percent. Banks also pulled back and the sector’s index fell 1.0 percent although Saudi banks and other companies are not dependent on overseas borrowing, so they are unlikely to face higher funding costs even if the kingdom’s debt rating is eventually reduced.
Property developer Dar Al Arkan dropped 2.9 percent after S&P on Monday affirmed the company’s corporate credit rating at B+, but revised the rating outlook to negative from stable.
S&P said Dar Al Arkan’s credit ratios might not recover in 2015 from the company’s large acquisitions of land in 2014, but it assumed the company’s operational performance would remain stable.
The stock had have surged 27.9 percent this year.
Meanwhile, Egypt’s stock index rose 0.7 percent in a broad rally after a short bout of profit taking.
Rating agency Moody’s said in a report on Monday that Egypt’s spending on fuel subsidies in the current fiscal year could be around 30 percent lower than budgeted thanks to cheaper oil.
In another positive signal, Egypt’s urban consumer inflation fell to an annual 9.7 percent in January from 10.1 percent in the previous month.