Most Gulf markets retreat on weak oil prices

Most stock markets in the Gulf ended lower on Wednesday, as easing oil prices weighed on sentiment, though losses were capped by growing expectations of a U.S. Federal Reserve rate cut in December.

Crude prices, a catalyst for the Gulf’s financial markets, were steady on Wednesday after sliding to a one-month low in the previous session, as investors assessed prospects of oversupply and talks over a Russia-Ukraine peace deal.

Saudi Arabia’s benchmark index dropped 0.5%, hit by a 1.1% fall in Al Rajhi Bank.

Elsewhere, shares of Umm Al Qura for Development and Construction Co plunged 9.1%, its biggest intraday fall since April - after Saudi Arabia’s Public Investment Fund disclosed on Wednesday that it had generated 950 million riyals ($250 million) by selling a 3.3% stake in the company.

Bearish sentiment triggered widespread selling across nearly all sectors. The persistent slump in crude oil continued to weigh on the market, as investors factored in possible progress in Russia-Ukraine negotiations and a projected sizable supply surplus in 2026, said Milad Azar Market analyst at XTB MENA.

“Additionally, liquidity continues to be strained by the continuous initial public offerings.”

Among other losers, oil behemoth Saudi Aramco was down 0.2%.

Dubai’s main share index fell 0.3%, with toll operator Salik Co losing 0.7%.

In Abu Dhabi, the index was down 0.3%.

The Qatari index rose 0.8%, with Qatar National Bank, the Gulf’s biggest lender by assets, advancing 1.6%.

Data released on Tuesday showed U.S. retail sales rose less than forecast in September, while the Producer Price Index climbed 2.7% year-on-year through September, matching the prior month-earlier gain.

The figures followed a series of dovish comments from Federal Reserve officials in recent days.

U.S. monetary policy shifts have a significant impact on Gulf markets, where most currencies are pegged to the dollar.

Outside the Gulf, Egypt’s blue-chip index dropped 0.9%, with Commercial International Bank retreating 1.9%.

Oman bourse was closed for a public holiday.