Most major stock markets in the Gulf fell in early trade on Thursday, with the Saudi index on course to post its sixth weekly loss as concerns around Federal Reserve interest rate hikes and economic slowdown weighed on sentiment.
Data released on Monday showed US services industry activity unexpectedly picked up in November, prompting investor speculation that the Fed could keep raising interest rates for longer which could hurt economic growth.
Traders expect a half-point hike from the Fed on Dec. 14.
Most Gulf Cooperation Council countries, including Saudi Arabia, the United Arab Emirates and Qatar, have their currencies pegged to the US dollar and follow the Fed’s policy moves closely, exposing the region to a direct impact from monetary tightening in the world’s largest economy.
Qatar bourse leads declines in Gulf on volatile oil, hawkish Fed fears
Saudi Arabia’s benchmark index dropped 0.5%, trading at its lowest in more than 19 months, weighed down by a 1.7% fall in oil giant Saudi Aramco.
The kingdom expects to post a second consecutive budget surplus in 2023, though down 84% from this year as an uncertain global economic outlook and lower crude prices look set to weigh on the top oil exporter’s revenue.
Saudi Arabia does not disclose the oil price it bases its budget on.
The International Monetary Fund (IMF) estimates the Saudi fiscal break-even oil price at $73.3 a barrel this year and $66.8 next year.
Dubai’s main share index fell 0.6%, hit by a 2.7% fall in blue-chip developer Emaar Properties. In Abu Dhabi, the index dropped 0.7%.
Russian President Vladimir Putin and the president of the United Arab Emirates (UAE), Sheikh Mohammed bin Zayed al-Nahyan, held a phone call on Wednesday to discuss OPEC+ cooperation and a Western price cap imposed on Russian oil, the Kremlin said.
The Qatari index added 0.2%, helped by a 1.1% rise in Qatar National Bank.
Brent crude futures rose $1, or 1.3%, to $78.17 per barrel by 0750 GMT, amid optimism over China’s easing of anti-COVID measures, recouping losses after slumping to the lowest levels so far this year in the previous session.
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