Major stock markets in the Gulf fell in early trade on Wednesday, tracking Asian equities after the US Federal Reserve Chair reiterated the likelihood of sharp rate hikes to tame inflation.
In his comments, Jerome Powell confirmed that a recent spate of generally robust economic data, particularly in the labor market, along sticky inflation, increases the likelihood that the Fed will raise its policy rate more aggressively.
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.
Gulf stocks end mixed ahead of Powell’s speech; Egypt down
Saudi Arabia’s benchmark index dropped more than 1%, weighed down by a 1.5% fall in Al Rajhi Bank and a 2.6% slide in Riyad Bank.
Separately, decisions on oil output taken by OPEC+ countries reflect consensus in the group, the Saudi foreign minister said on Tuesday after reports of differences among members.
Foreign Minister Prince Faisal bin Farhan Al Saud played down a Wall Street Journal report of divergence between Saudi Arabia and the UAE on a range of policy areas including OPEC and Yemen.
Dubai’s main share index declined 0.7%, with toll operator Salik sliding 2.9%. and Dubai Electricity and Water Authority retreating 1.2%.
In Abu Dhabi, the index was down 0.5%, on course to extend losses from the previous session.
Oil prices fell for a second straight session on Wednesday, driven by fears that more aggressive US interest rate hikes would hit demand, while the market awaited further clarity on inventories.
The Qatari benchmark lost 0.6%, as most of the stocks on the index were in negative territory, including telecoms firm Ooredoo, which was down 5.6% as the stock went ex-dividend.
Comments
Comments are closed for this article.