Gulf stock markets ended mixed on Thursday, amid rising expectations of a Federal Reserve rate cut next month, while subdued oil prices capped overall risk appetite.
With a dearth of data on the U.S. economy following the end of the government shutdown, investors are focusing intensely on statements from Federal Reserve officials, with remarks this week significantly strengthening expectations for a rate cut.
According to the CME FedWatch Tool, traders now assign an 85% probability to a rate cut next month, up sharply from just 30% a week ago.
U.S. monetary policy shifts have a significant impact on Gulf markets, where most currencies are pegged to the dollar.
Saudi Arabia’s benchmark index finished 0.1% higher, snapping a three-session losing streak, with Al Rajhi Bank gaining 0.4% and Saudi National Bank, the country’s biggest lender by assets, up 0.7%.
The market remains impacted by lower oil prices and their bearish outlook. If the downtrend in crude oil continues, it may further weigh on the index, said Daniel Takieddine, co-founder and CEO of Sky Links Capital Group.
Elsewhere, oil behemoth Saudi Aramco inched 0.4% higher.
Oil prices – a catalyst for the Gulf’s financial markets – steadied on Thursday as market participants weighed talks to end the war in Ukraine against the impact of Western sanctions against Russian supply, though trading was set to remain thin due to the U.S. Thanksgiving holiday.
Dubai’s main share index was up 0.1%, helped by a 3.3% leap in budget airline Air Arabia.
According to Takieddine, the market’s underlying fundamentals are still sound while a sustained recovery would depend on a broader improvement in investor sentiment.
In Abu Dhabi, the index dropped 0.3%, with Dana Gas shedding 2.6%, after a rocket strike targeted its Khor Mor facility, one of the largest gas fields in Iraqi Kurdistan.
The attack on Wednesday prompted the suspension of operations at the gas field and caused major power cuts across the region.
The Qatari index slipped 0.4%, with Qatar Islamic Bank retreating 1.1%.
Outside the Gulf, Egypt’s blue-chip index advanced 1.3%, with Commercial International Bank closing 1.6%.
Saudi Arabia edged up 0.1% to 10,641
Abu Dhabi fell 0.3% to 9,705
Dubai rose 0.1% to 5,815
Qatar dropped 0.4% to 10,645
Egypt gained 1.3% to 40,039
Bahrain was up 0.2% to 2,040
Kuwait eased 0.3% to 9,413
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