In the early hours of Wednesday’s trading session, the Gulf’s major stock markets demonstrated little movement, reflecting the cautious sentiment among investors following statements from Federal Reserve officials indicating a prolonged period of higher interest rates.
Federal Reserve Chair Jerome Powell underscored that recent inflation data, which has shown unexpected increases for three consecutive months, has not instilled sufficient confidence among policymakers to consider easing monetary policy anytime soon. This stance suggests that the central bank may need to maintain elevated interest rates for a longer duration than initially anticipated.
Given that many Gulf currencies are pegged to the U.S. dollar, any shifts in U.S. monetary policy typically reverberate across the region, influencing the policies of countries like Saudi Arabia, the United Arab Emirates, and Qatar.
In Saudi Arabia, the benchmark index experienced a 0.6% decline, largely attributed to a 1.7% drop in shares of the country’s largest lender, Saudi National Bank. Additionally, Saudi Arabia’s foreign minister announced significant investment plans in projects in Pakistan, following the recent announcement of expedited $5 billion investment from Saudi Arabia to Islamabad.
Meanwhile, in Qatar, the index saw a 0.2% decline, with notable decreases observed in the shares of petrochemical maker Industries Qatar and Commercial Bank, down by 1.1% and 2.1%, respectively.
Tensions persisted in the Middle East, particularly between Israel and Iran, with Israel reaffirming its commitment to retaliate against Iran’s recent attack, despite international calls for restraint.
Abu Dhabi’s index experienced a slight decrease of 0.1%, reflecting the cautious mood prevailing in the market. In Dubai, the main share index traded relatively flat amid volatile market conditions, as investors monitored developments both locally and globally for potential impacts on market sentiment and performance.