Gulf Markets Extend Gains on Optimism for US Rate Cuts

by | Aug 18, 2024 | International News

Most Gulf stock markets closed higher on Sunday, continuing the momentum from the previous session, as positive U.S. economic data bolstered expectations that the Federal Reserve might begin cutting interest rates next month.

Recent U.S. data indicated moderating inflation and strong retail spending, shifting market sentiment away from recession fears, which had been triggered by a weak U.S. jobs report earlier in August, towards a more optimistic outlook for economic growth.

As global central bankers prepare to meet in Jackson Hole, Wyoming this week, traders anticipate the Fed will reduce borrowing costs from a 23-year high next month, though the likelihood of a larger 50-basis-point cut has decreased to 25% from 55% a week ago, according to the CME FedWatch tool.

Given that monetary policy in the Gulf Cooperation Council (GCC) often aligns with the Fed’s decisions due to regional currencies being pegged to the U.S. dollar, these developments have positively impacted Gulf markets.

In Saudi Arabia, the benchmark index rose 0.6%, led by a 6.2% gain in aluminium products manufacturer Al Taiseer Group. Qatar’s index edged up 0.1%, supported by a 0.9% increase in petrochemical producer Industries Qatar.

Outside the Gulf, Egypt’s blue-chip index fell 0.6%, weighed down by a 1.5% decline in Talaat Mostafa Group.

Market Summaries:

  • Saudi Arabia: Up 0.6% to 11,981
  • Qatar: Up 0.1% to 10,135
  • Egypt: Down 0.6% to 29,460
  • Bahrain: Up 0.3% to 1,943
  • Oman: Flat at 4,691
  • Kuwait: Up 0.4% to 7,765

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