As regional central banks raised significant interest rates in response to the U.S. Federal Reserve’s decision to raise rates by a quarter of a percentage point, most stock markets in the Gulf area concluded the day with lower prices on Thursday.
Gulf markets fall following Fed rate hike: Only the Kuwaiti dinar, fixed to a basket of currencies including the dollar, stands apart as the majority of regional currencies tie to the dollar, leading Gulf oil and gas exporters to follow the Fed’s rate movement.
The Dr. Sulaiman Al-Habib Medical Services decline of 2.3% and the Al Rajhi Bank decline of 0.9% each contributed to a 0.5% decline in Saudi Arabia’s benchmark index.
Emirates Central Cooling Systems had a 2.1% loss, while Dubai’s primary stock market fell 0.3%.
A 1.8% increase in second-quarter profit announced by the leading lender Emirates NBD curbed the losses.
After the Fed raised rates, there was some turbulence on the Dubai Stock Exchange. According to Daniel Takieddine, CEO MENA at BDSwiss, the main index could experience some price corrections if traders move to safeguard their profits as a result of the uncertainties surrounding monetary policy.
The market may, however, continue to be supported by solid fundamentals.
The index in Abu Dhabi decreased by 0.1%.
The UAE announced it would boost the base rate on its Overnight Deposit Facility to 5.40% from 5.15%, effective Thursday. The Saudi central bank, known as SAMA, increased its repo rate to 6% and its reverse repo rate to 5.5%, both by 25 basis points.
However, the Qatari index defied the general trend to end 1.2% higher, propelled by a 4% increase in petrochemical producer Industries Qatar.
Outside of the Gulf, Egypt’s blue-chip index down 0.3% as majority of the index’s components, including Eastern Co, which was down 2.2%, were in the red.
According to Takieddine, foreign investors are still selling stocks on the Egyptian stock market, which is continuing to experience pressure.
SAUDI ARABIA lost 0.5% to 11,845 ABU DHABI fell 0.1% to 9,759 DUBAI down 0.3% to 4,029 QATAR gained 1.2% to 10,895 EGYPT lost 0.3% to 17,339 BAHRAIN was up 0.4% to 1,992 OMAN rose 0.3% to 4,780 KUWAIT down 0.2% to 8,087 =======================================