Most Middle Eastern stock markets fell on Wednesday after oil prices pulled back sharply, interrupting a rally that had been built to a large extent on hopes that crude had bottomed out. As Brent crude fell back below $33 a barrel, the Saudi stock index dropped 1.3 percent to 5,942 points, retreating from close to technical resistance at the February and January peaks of 6,056-6,098 points. The petrochemical sector led the market down with Saudi Basic Industries losing 2.1 percent. Second-tier speculative stocks also tumbled. Saudi Paper, which had jumped 8.1 percent in unusually heavy trade on Tuesday, tumbled 8.1 percent on Wednesday. Retailing firms were weak. Al Othaim Markets, a supermarket chain, fell 1.9 percent although the board recommended a cash dividend of 2.00 riyals per share for 2015, up from 2014 and above NCB Capital's forecast of 1.75 riyals. The retail sector may be hurt this year by the erosion of consumers' purchasing power after inflation spiked in January. On Tuesday the kingdom's statistics department said consumer price inflation hit 4.3 percent year-on-year, the highest since the data series began in 2012, after austerity measures in the state budget raised costs of electricity, water and gasoline. "We anticipate domestic inflationary pressure to intensify during 2016, driven by second-round effects stemming from the recent energy price reforms," said a research note by Riyadh-based Jadwa Investment. Dubai's index fell 1.7 percent to 3,137 points as investors booked profits close to chart resistance at the late December peak of 3,189 points. Emirates NBD, the largest lender by market value, fell 2.8 percent after adding 2.6 percent the previous day. The shares went ex-dividend on Wednesday. On Tuesday, Goldman Sachs raised its recommendation for the stock to "buy" from "neutral". But builder Drake & Scull, which has been rebounding in the past few weeks from a record low, added a further 2.7 percent. In Abu Dhabi, the stock index dropped 0.7 percent. Abu Dhabi Commercial Bank, which had surged 2.5 percent on Tuesday after Goldman Sachs raised its price target for the stock to 8.1 dirhams with a "buy" rating, fell 1.0 percent to 6.88 dirhams. Qatar's main benchmark fell 0.9 percent as Masraf Al Rayan, the Islamic bank, slid 4.1 percent. The bank is expected to post annual profit growth of between 8 and 10 percent in 2016, Chairman Hussain Ali al-Abdulla said at its annual general meeting on Tuesday. Bahrain's market outpaced the region, rising 1.1 percent on the back of Ahli United Bank, the country's biggest listed lender, which jumped 4.6 percent after it posted an 11.1 percent increase in its fourth-quarter net attributable profit to $118.0 million. SICO Bahrain had forecast $110.3 million. Egypt's main benchmark dropped 0.8 percent to as Palm Hills Development retreated 3.4 percent and Global Telecom Holding lost 4.8 percent. — SG/Reuters
