Major stock markets in the Gulf fell in early trade on Wednesday as investors struggled with the possibility that the Federal Reserve may not cut US interest rates as soon as previously expected.
Fed Governor Christopher Waller said the US is “within striking distance” of the central bank’s 2% inflation goal, but it should not rush toward cuts in its benchmark interest rate until it is clear that lower inflation will sustain.
The Fed has left the policy rate in the current range of 5.25% to 5.5% since July.
Most Gulf currencies are pegged to the dollar and any monetary policy change in the United States is usually mimicked by Saudi Arabia, the United Arab Emirates and Qatar.
Dubai’s main share index dropped 0.3%, weighed down by a 0.9% fall in blue-chip developer Emaar Properties and a 2.2% decrease in Tecom Group.
In Abu Dhabi, the index was down 0.2%, with conglomerate International Holding losing 0.7%.
Elsewhere Abu Dhabi Commercial Bank (ADCB) eased 0.2%.
ADCB, UAE’s third-largest lender, will set up a branch in Riyadh after it obtained an in-principle approval from Saudi Arabia, the lender said in a statement on Wednesday.
The Qatari benchmark retreated 0.4%, hit by a 1.1% fall in the Gulf’s biggest lender Qatar National Bank and a 1% decline in petrochemical maker Industries Qatar.
Meanwhile, the Qatar Investment Authority (QIA) and fund manager Ashmore Group have launched a fund aimed at encouraging foreign investors to buy into the Gulf country’s stock market, the sovereign wealth fund said on Tuesday.
Saudi Arabia’s benchmark index, however, bucked the trend to edged 0.1% higher, with Elm Company rising 1% after the digital solutions provider firm signed a contract with the Ministry of Human Resource and Social Development to prioritise social surveying works.
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