Investor focus on potential Federal Reserve interest rate hikes affects Gulf markets.
Most stock markets in the Gulf witnessed a downward trend on Sunday as investors turned their attention to the possibility of more Federal Reserve interest rate hikes while the U.S. approaches a deal to raise its debt ceiling. Given that most Gulf Cooperation Council countries, including Saudi Arabia, have their currencies pegged to the U.S. dollar and generally follow the Federal Reserve's policy decisions, the region is directly impacted by any monetary tightening in the United States. Saudi Arabia's benchmark index, TASI, experienced a 0.4% decline, with Al Rajhi Bank falling 1% and Dr. Sulaiman Al-Habib Medical Services finishing 1.4% lower. However, oil giant Saudi Aramco managed to add 0.2% to its value.
Oil prices, a significant catalyst for the Gulf's financial markets, showed a slight increase on Friday. This was attributed to U.S. officials nearing a debt-ceiling agreement and the market grappling with conflicting messages on oil supply from Russia and Saudi Arabia ahead of the next OPEC+ policy meeting. In Qatar, the index experienced a 0.3% decrease, largely influenced by a 2.6% slide in the telecoms firm Ooredoo.
Egypt defers payments for wheat purchases amidst currency shortage.
As Gulf markets face uncertainty due to potential interest rate hikes, and Egypt deals with its currency shortage and subsidy challenges, investors and analysts will closely monitor these developments to assess the broader economic implications in the region.