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Gulf stock indices take a hit amid dwindling Fed rate-cut prospects and geopolitical concerns

Daily Equity - Gulf stock indices take a hit amid dwindling Fed rate-cut prospects and geopolitical concerns

Gulf markets saw a dip as investor confidence waned due to uncertainty about a rate cut by the Federal Reserve; Saudi Arabia witnessed gains, Dubai’s real estate drags index

Growing apprehensions that the U.S. Federal Reserve would postpone interest rate decreases caused the majority of Gulf markets to post losses on Sunday. The already cautious attitude was further tempered by ongoing geopolitical tensions in the Middle East.

Gulf Markets React to U.S. Federal Reserve’s Cautious Stance

Investor sentiment across the Gulf region has been dampened due to growing concerns that the U.S. Federal Reserve will delay any interest rate cuts, continuing its cautious stance on monetary policy. As a result, most Gulf markets recorded losses. The Dubai Financial Market saw a decline of 0.5%, with key sectors like real estate and utilities leading the drop. Real estate giant Emaar Properties, a major component of the market, experienced a significant downturn, reflecting broader investor risk aversion.
Similarly, the Abu Dhabi Securities Exchange fell by 0.4%, driven by a weak performance in financial stocks, while energy equities posted a slight recovery but were overshadowed by the broader market weakness. This cautious approach stems from worries that the Fed’s decision to hold interest rates high could prolong global economic uncertainty and slow growth in the region.
In contrast, Saudi Arabia’s Tadawul All Share Index bucked the regional trend, showing a modest 0.3% rise. The Saudi market was bolstered by strong performances in the finance sector, particularly banks, and gains in energy-related stocks, reflecting investor confidence in the nation’s ability to weather global uncertainties. The Kingdom’s economic resilience has been supported by ongoing efforts to stabilize the economy during times of geopolitical and financial volatility, including strategic fiscal measures and a robust oil industry.

Mixed Performance in Gulf Equity Markets

The performance of Gulf equity markets on Sunday was mixed, with most markets showing losses, while Saudi Arabia’s stock market bucked the trend with a modest gain. The Saudi Tadawul All Share Index rose by 0.3%, driven largely by strong performances in the finance and energy sectors. The banking sector saw notable gains, with major players such as Al Rajhi Bank and National Commercial Bank advancing by 1.2% and 0.8%, respectively. Energy stocks, particularly those linked to oil, also supported the market, as the price of crude oil remained relatively stable around $90 per barrel.

Read More: Global Oil Prices Set For Freefall, Oversupply The Culprit

In contrast, other Gulf markets like Dubai and Abu Dhabi posted losses. The Dubai Financial Market index fell by 0.5%, dragged down by underperforming real estate stocks, particularly Emaar Properties, which saw a drop of 1.5%. The Abu Dhabi Securities Exchange also dipped 0.4%, with financial stocks in the red, despite a slight uptick in energy-related equities.

Geopolitical Tensions and Economic Uncertainty

The Gulf equity markets remain clouded by rising geopolitical tensions, especially the escalating conflict between Iran and Israel, which have exacerbated investor concerns. This ongoing hostilities in the Middle East have led to increased oil price volatility, with Brent crude fluctuating between $85 and $92 per barrel. The uncertainty surrounding potential disruptions in oil supply chains is a key factor contributing to market instability.
Additionally, global economic concerns, such as inflationary pressures in the U.S. and the Federal Reserve’s stance on interest rates, continue to weigh on investor sentiment. The cautious tone of the Fed has led to increased risk aversion, with many investors reallocating capital to safer assets like gold and U.S. Treasury bonds. The Gulf markets, highly sensitive to global trends, have reflected this unease, with indices like the Dubai Financial Market and Abu Dhabi Securities Exchange showing declines of 0.5% and 0.4%, respectively.
Further compounding the challenges, the geopolitical unrest has led to heightened concerns about potential disruptions in trade and supply chains, particularly in energy markets. This has caused investors to reassess their positions, leading to market corrections across the region. Additionally, Saudi Arabia’s market remains somewhat insulated, with the Tadawul All Share Index rising by 0.3%, sustained by oil-linked stocks and government-led economic stability measures. However, analysts caution that any prolonged escalation in the region could further dampen investor confidence and exacerbate economic uncertainty across the Gulf.

Gulf stock indices take a hit amid dwindling Fed rate-cut prospects and geopolitical concerns

Impact Of Heavy FII Sell Off in

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