Investors to take a cue from Europe

Middle East markets will look to both Europe and the region this week as the euro-zone crisis and the release of third-quarter earnings closer to home set the trading pace.
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Italy's Senate on Friday approved austerity measures in an attempt to appease investors and pave the way for a new government following the expected departure of the prime minister Silvio Berlusconi. How effective those moves are perceived by investors will become apparent tomorrow when European markets re-open.

"They are putting Band-Aids on the problem, but not really tackling the root cause," said Saleem Khokhar, the head of equities at National Bank of Abu Dhabi. "It's a good first step, however more action needs to be done by policymakers to convince investors that the euro zone is taking its debt crisis seriously."

Italian bond yields, which raced way above sustainable levels last week, triggered a roller-coaster ride for global and regional stock-markets. The Egyptian Exchange, the only bourse in the region classified as an emerging market, declined 1.4 per cent to 4383.49 points last week.

The second-largest bourse in the region is expected to see a flurry of trading activity as companies release third-quarter results, providing an indication of whether a recovery is in place following the civil uprising that ousted Hosni Mubarak as president. Some stocks may face pressure as court cases unfold.

Egypt's annual consumer price inflation hit a four-year low last month, at 7.1 per cent year-on-year, down from 8.2 per cent in September. Rising living costs were seen as one trigger for the country's popular uprising.