DUBAI: Most stock markets in the Gulf ended lower on Monday mirroring global declines as excitement over a potential US interest rate cut in September faded.
Federal Reserve Chair Jerome Powell on Friday signalled a possible rate cut at the Fed’s meeting next month, saying that risks to the job market were rising but inflation remained a threat, and that a decision wasn’t set in stone.
Saudi Arabia’s benchmark index gave up early gains to edge 0.1 percent lower, hit by a 0.8 percent fall in the country’s biggest lender Saudi National Bank.
Elsewhere, oil giant Saudi Aramco dropped 0.3 percent.
Powell’s dovish nod improved sentiment, with markets wagering an 87 percent chance of a quarter-point cut on Sept. 17, as per CME’s FedWatch tool and 53.3 basis points of cumulative reductions by year-end, according to LSEG.
The Fed’s stance holds significant implications for Gulf economies, where most currencies are pegged to the US dollar, making it an anchor for regional monetary stability.
The prospect of a rate cut next month could still support the market, said Osama Al Saifi, Managing Director for MENA at Traze.com.
“Meanwhile, oil prices remain a risk; despite the rebound, the overall trend is still pointing to the downside, and geopolitical developments will likely influence the market’s next move.”
Dubai’s main share index gained 0.2 percent, with blue-chip developer Emaar Properties rising 1 percent.
In Abu Dhabi, the index ended flat.
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