Most stock markets in the Gulf ended lower on Wednesday, tracking global shares as market optimism about early U.S. interest rate cuts ebbed, while the latest escalation of hostilities in the region also weighed on sentiment.
Fed officials in December predicted 75 basis points (bps) of rate cuts in 2024, driving money market bets for around double that amount of cuts that prompted a cross-market year-end rally.U.S. data this week should clarify the outlook. Monetary policy in the six-member Gulf Cooperation Council (GCC) is usually guided by Fed decisions as most regional currencies are pegged to the U.S. dollar.Saudi Arabia’s benchmark index dropped 1.6%, dragged down by a 3.8% fall in Elm Co and a 0.3% decrease in oil giant Saudi Aramco.Oil prices – a catalyst for the Gulf’s financial markets – dipped slightly after sharp moves earlier in the week, with investors cautious about the U.S. economy amid supply disruptions from persistent tensions in the Red Sea.The Qatari benchmark slid 3%, its biggest intraday fall since June 2022, extending losses from the previous session when it snapped an 11-session winning streak. Qatar Islamic Bank plunged 6.5% and petrochemical maker Industries Qatar fell 3.3%.Dubai’s main share index eased 0.3%, with blue-chip developer Emaar Properties losing 2%. Amid growing regional tensions, Hamas deputy leader Saleh al-Arouri was killed on Tuesday in an Israeli drone strike in Lebanon’s capital Beirut, Lebanese and Palestinian security sources said, raising the risk of war in Gaza spreading well beyond the Palestinian enclave. Israel has neither confirmed nor denied that it killed Arouri.In Abu Dhabi, the index gained 1.3%, buoyed by a 3.5% jump in conglomerate International Holding Company (IHC) . IHC – which is chaired by Sheikh Tahnoon bin Zayed al-Nahyan, the UAE’s national security adviser – has formed a new holding company that will hold a $27 billion portfolio across industries from asset management to mining.Outside the Gulf, Egypt’s blue-chip index fell 0.3%.
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