Egyptian shares made their largest one-day gain in more than nine years after the Mohammad Mursi was named as the country’s first freely elected president, while most Gulf markets slipped amid weak global cues.
Cairo’s index surged 7.6 percent, its largest single-day rise since February 2003, after Mursi’s win was announced Sunday, which boosted hopes for a violence-free transition from army rule. Monday’s rally is also the fourth biggest gain in the index’s 14 year history.
Traders, however, were cautious, saying the market euphoria could quickly evaporate if the new president cannot form a government with broad political support.
“I wouldn’t judge the market on one day. Let’s wait for the rest of the week. One more speech and the market could drop,” said Osama Mourad, CEO of Arab Finance Brokerage.
The market fell 10 percent over the course of the election on fears it could be derailed or marred by violence.
But voting and the announcement of Muslim Brotherhood’s Mursi’s win against Ahmad Shafiq, ousted leader Hosni Mubarak’s last prime minister, passed off peacefully.
“The market is celebrating the lack of violence around this result,” said Mourad. “The market was afraid of clashes on the streets.”
Meanwhile, in Saudi Arabia, the index fell 0.9 percent in its third straight loss as weak global markets and declines in crude oil prices weighed on sentiment.
It trimmed year-to-date gains to 4.1 percent, losing most of the 23.8 percent surge during January and early April.
“The news internationally continues to be bad and there are demand concerns from Western and emerging markets, which are causing investor fear,” said Mohammad Faisal Potrik, research analyst at Riyad Capital.
Equities hit a one-week low and Spanish borrowing costs rose Monday as investors worried that policymakers at a European summit this week would make little progress in solving the debt crisis that is hurting international economic growth.
Brent crude oil fell briefly below $90, with concerns about faltering global growth hitting investor confidence.