February 13, 2023

Gulf bourses drop ahead of Fed meeting on expectations of higher rates

On Tuesday, the majority of the major Gulf equity markets were down, as investors remained cautious ahead of a U.S. Federal Reserve policymaking meeting. Many investors were concerned that interest rates would continue to rise.

Investors were anticipating Fed Chairman Jerome Powell’s later-that-day speech at the Economic Club of Washington.

To reduce the excessive inflation, the Fed will probably need to raise the benchmark interest rate above 5%.

The majority of Gulf currencies are tied to the dollar, and Saudi Arabia, the United Arab Emirates, and Qatar frequently follow changes in U.S. monetary policy. As a result, the area is directly affected by any Fed tightening of monetary policy.

The largest lender in the Gulf, Qatar National Bank (QNBK.QA, down 1.9%), along with market leaders Masraf Al Rayan (MARK.QA, down 1.2%, and Qatar Commercial Bank (COMB.QA, down 1.2%) all saw declines that contributed to the 0.5% decline in the Qatari Stock Index (.QSI).

The benchmark stock index for Saudi Arabia (.TASI) started the day down, extending its losing streak to seven sessions. The largest Islamic bank in the world by market value, Al Rajhi Bank (1120.SE), had a 0.6% decline, which impacted on the index.

Retal Urban (4322.SE), a luxury real estate developer, and Dr. Sulaiman Al-Habib Medical (4013.SE), a physician, both had declines of 0.3% and 1.3%.

The benchmark stock index (.FTFADGI) in Abu Dhabi began lower by 0.1%, being weighed down by drops of 0.3% and 0.4% in conglomerate International holding Company (IHC.AD) and Alpha Dhabi, respectively (ALPHADHABI.AD).

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