Recession fears hit region’s indexes

Most Middle East stock markets dropped on Thursday as disappointing economic signals from China and Europe coupled with an inverted US bond yield curve stoked fears that the global economy was hurtling toward recession.

Gross domestic product growth in the 19-country euro zone slowed down to 0.2 per cent in the second quarter, from 0.4 per cent in the first three months of the year, while the intensifying US trade war sent China’s industrial output growth cooling to a more than 17-year low.

Reinforcing the looming global slowdown was the US Treasury bond yield inversion, meaning rates on short-term bonds were higher than longterm yields, which is widely seen as signalling recession.

The mounting concerns also caused oil prices to shed a further 3 per cent, extending the previous session’s 3 per cent drop.

Egypt’s index closed 1.7 per cent lower to 14,295 points ending its four-day winning streak. The index particularly jumped in the previous two sessions on news that the country’s headline inflation rate fell to its lowest in nearly four years.

Commercial International Bank was down 2 per cent and cigarette maker Eastern Company fell 3.1 per cent. It raised the prices of some of its cigarettes by 4.5 per cent to 6 per cent, citing higher labour costs.

In Dubai, the index was down 1.3 per cent at 2,796 points led by real estate stocks. The emirate’s blue-chip developer Emaar Properties shed 1.9 per cent while Damac Properties fell 3.2 per cent. The two developers earlier this month reported lower second-quarter profit, hurt by the emirate’s slumping property market.

The Abu Dhabi index was flat as a 1.1 per cent gain at market heavyweight First Abu Dhabi Bank offset losses in the real estate sector.

In Bahrain the index was down 0.3 per cent at 1,535 points while in Kuwait the index slipped 0.8 per cent at 6,685 points.

The Abu Dhabi index was flat as a 1.1 per cent gain at First Abu Dhabi Bank offset losses in the real estate sector