Saudi Arabia's stock market rose sharply on Sunday after King Salman ordered a lavish payout to state employees and oil prices jumped on reports of declining US drilling activity. Most other Gulf markets also climbed in sympathy. The Saudi index jumped 3.0 percent in heavy trade to 9,144 points, breaking above chart resistance on the late December peak at 8,948 points; the next resistance is on the 100-day average, now at 9,436 points.
The longer-term technical outlook also appears to have improved. A bullish symmetrical triangle triggered in the last few days, formed by the highs and lows since December, indicates the possibility of a rebound in coming weeks or months back to around 10,500 points.
Petrochemicals giant Saudi Basic Industries, up 7.8 percent, was the main support on Sunday.
Its surge mirrored that of Brent crude, which rose 8 percent to $52.99 a barrel on Friday after fresh data showed the number of rigs drilling for oil in the United States fell by 7 percent during the week. This strengthened hopes that oil has finally bottomed out.
Another key factor was Salman's order late on Thursday for the immediate payment of two months of bonus salary to all state employees and pension to retired government workers.
The salary payout alone could be worth up to around 70 billion riyals ($18.6 billion) - about 8 percent of the original state budget for 2015, or 2.5 percent of last year's gross domestic product. Additional state spending was allocated to students, civic and professional associations around the country, and upgrading electricity and water services.
The move could boost Saudi Arabia's gross domestic product by 0.75 percent this year, said John Sfakianakis, regional director at fund management firm Ashmore Group, adding that retailers would be the first sector to benefit from it.
Stocks in the sector were among top gainers on Sunday. Jarir Marketing surged 5.7 percent, United Electronics added 8.4 percent and Fawaz Alhokair rose its daily 10 percent limit.
Dubai's index jumped 4.5 percent to close at 3,840 points, its biggest daily gain in six weeks. Trading volume also rose in a positive technical sign.
Conglomerate Dubai Investments led gains and surged 13.8 percent after it said its board had proposed a higher dividend for 2014: 12 percent cash and 6 percent bonus shares. This compared with a 7 percent cash dividend and 7 percent bonus shares in the year-earlier period.
The firm's board also approved the acquisition of a majority stake in investment company Al Mal Capital.
Abu Dhabi's index jumped 2.2 percent on the back of large banks. National Bank of Abu Dhabi surged 4.3 percent, First Gulf Bank rose 2.9 percent and Abu Dhabi Commercial Bank added 3.2 percent. The sector has reported generally strong fourth-quarter results.
"The eight UAE banks under coverage have all reported, with Abu Dhabi Islamic Bank representing the only one of the eight to disappoint in terms of the net profit outturn and recommended distribution," NBAD Securities said in a note on Sunday.
Qatar's bourse rose 1.4 percent in a broad rally. Industries Qatar, the Gulf's second-largest petrochemicals firm, jumped 2.4 percent. Markets in Kuwait and Oman added 1.0 and 0.2 percent respectively.
Egypt's bourse edged down 0.6 percent after one of the bloodiest attacks on security forces in years, in which
Shares in investment bank EFG Hermes dropped 2.4 percent after it cancelled plans for the sale of nearly 37 million shares held by its subsidiary because offers from the market had not met its expectations.
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