BENGALURU: Most Gulf stock markets closed lower on Sunday as investors turned cautious after US Federal Reserve Chair Kevin Warsh reiterated the central bank’s commitment to bringing inflation back to target, boosting expectations of another interest-rate increase.
Warsh said at the Fed’s annual economic symposium in Jackson Hole that policymakers would “have work to do” if they were not confident that underlying inflation was returning to the central bank’s 2 percent target. He also noted that financial conditions did not appear restrictive.
Following his remarks, market-implied odds of a rate increase at the Fed’s September meeting rose to 55.7 percent from 35.4 percent on Thursday, according to CME Group’s FedWatch tool.
Gulf markets are particularly sensitive to changes in US monetary-policy expectations since most regional currencies are pegged to the dollar.
Saudi Arabia’s benchmark index fell 0.7 percent for a second consecutive session, with most constituents ending in negative territory.
Saudi Arabian Mining declined 3.3 percent, while Saudi National Bank, the kingdom’s largest lender by assets, lost 1.2 percent.
“The Saudi market could remain vulnerable to further downside if investors continue taking profits after several sessions of gains,” said Hani Abuagla, senior market analyst at XTB MENA.
Qatar’s benchmark index edged 0.1 percent lower, weighed down by declines in financial and communications shares.
Doha Bank dropped 5.1 percent, while The Commercial Bank fell 2.5 percent. In contrast, QatarEnergy-linked Industries Qatar gained 0.6 percent, and Gulf International Services rose 3.9 percent.
QatarEnergy sold at least 7 million barrels of various Qatari crude grades through a tender this week for October loading, several trade sources said on Friday.
“Looking ahead, GCC markets are likely to remain sensitive to shipping developments in the Strait of Hormuz and any diplomatic progress,” Abuagla said. “Strong domestic fundamentals may help limit downside risks, though investor caution could persist as global bond yields rose following Warsh’s remarks, with attention now turning to the Fed’s next meeting.”
Outside the Gulf, Egypt’s blue-chip index slipped 0.3 percent, with most shares trading lower. Commercial International Bank fell 0.8 percent, while Talaat Moustafa Group lost 1.3 percent.
Abu Qir Fertilizers and Chemical Industries, however, rose 4.8 percent after the company said it had expanded ammonia production capacity and reduced natural-gas consumption.
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