Most Gulf markets retreat as Fed uncertainty persists

DUBAI: Most stock markets in the Gulf ended lower on Monday as investors exercised caution ahead of key US inflation

data later in the week that could provide clarity on the size of the Federal Reserve’s likely interest rate cut this month.

Investors analysed last week’s mixed US jobs data and comments from Fed officials, which suggested a weak labour market but without sufficient justification for a 50-basis point interest rate cut.

The US inflation report on Wednesday will be a key indicator that could shift market expectations for the outcome of the Fed’s Sept. 17-18 meeting.

Investors wondered whether the mixed US August payrolls report would be enough to tip the Fed into cutting rates by an outsized 50 bps when it meets next week.

Monetary policy in the six-member Gulf Cooperation Council (GCC), including the UAE, is usually guided by the Fed’s policy decisions because most currencies in the region are pegged to the dollar.

Saudi Arabia’s benchmark index dropped 0.2%, with Al Taiseer Group losing 0.5%, and Riyad Bank retreating 2.1%.

Dubai’s main share index decreased 0.3%, hit by a 2.4% decline in blue-chip developer Emaar Properties.

In Abu Dhabi, the index declined 1%, weighed down by a 2.2% slide in Emirates Telecommunications Group.