Saudi market surges, oil rallies after fiscal deal

Global stock markets surged almost 2.0 percent and commodity prices rallied yesterday after US legislators struck a deal to halt a round of automatic fiscal tightening that threatened to push the world’s largest economy into recession.
Oil prices rose to near 11-week highs and Saudi stocks extended gains from Tuesday’s session, boosted by property and petrochemical stocks.
“Obviously, a lot of investors around the world, Saudis included, have been watching carefully the critical debate over the fiscal cliff and were relieved with the final verdict,” Basil Al-Ghalayini, CEO of BMG Financial Group, told Arab News last night, commenting on market gains.
The benchmark Tadawul All-Share Index climbed 1.2 percent yesterday to 6,940 points.
Saudi Basic Industries Corp. (SABIC) rose the most in three weeks. The leading petrochemical stock rose 1.4 percent.
Tamer El Zayat, senior economist at the National Commercial Bank (NCB), commented: “The recently released historical budget coupled by the buildup to year-end dividends’ announcements have ostensibly improved the trading activity across the board.”
He added: “Yet, I do believe that averting the US’s fiscal cliff was the biggest driver behind breaking above the 6900 mark, given the positive correlation between the Saudi bourse and the global markets.”
Brent February crude was up 75 cents at $ 111.86 a barrel at 609 GMT, back above the 100-day moving average of $ 111.28. The contract reached $ 112.90, its highest point since October.
US February crude jumped $ 1.28 at $ 93.10 a barrel, easily pushing back above the 200-day moving average of $ 91.90. It reached $ 93.87, also the highest since October.
“The US fiscal deal has been very positive for markets, which can now look forward to a better year ahead,” said Eugen Weinberg, global head of commodities research at Germany’s Commerzbank in Frankfurt, told Reuters.