Gulf stocks ended lower on Monday amid concerns that central banks around the world are certain to increase borrowing costs to tame high inflation this week, which includes chances of a super-sized hike in the United States.
The Federal Reserve is likely to raise U.S. borrowing costs faster and further than previously expected after data on Tuesday showed underlying inflation broadening out rather than cooling as expected.
Saudi Arabia’s benchmark index dropped 1.1%, extending losses for a second session, dragged down by a 1.3% fall in Al Rajhi Bank and a 2.5% slide in the kingdom’s biggest lender Saudi National Bank.
Most Gulf Cooperation Council countries, including the kingdom, have their currencies pegged to the dollar and generally follow the Fed’s policy moves, exposing the region to a direct impact from monetary tightening there.
Dubai’s main share index lost 0.4%, while the Abu Dhabi index retreated 1%.
In Qatar, the benchmark index slid 1.7% as most of the stocks on the index were in the negative territory including Qatar Islamic Bank, which declined 4%.
Gulf stocks sink as markets brace for more aggressive rate hikes
Crude prices, a key catalyst for the Gulf’s financial markets, fell by more than 2% pressured by expectations of weaker global demand and by U.S. dollar strength ahead of possible large increases to interest rates, though supply worries limited the decline.
Outside the Gulf, Egypt’s blue-chip index rebounded 0.9% as investors traded into weakness after four consecutive days of decline tuned its stocks more attractive to buy in.
SAUDI ARABIA dropped 1.1% to 11,446
ABU DHABI fell 1% to 10,096
DUBAI dipped 0.4% to 3,474
QATAR shed 1.7% to 12,861
EGYPT rose 0.9% to 9,854
BAHRAIN slipped 0.1% 1,936
OMAN gained 0.1% to 4,470
KUWAIT dropped 0.7% to 8,397
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