Most Gulf stock markets ended lower on Tuesday, influenced by concerns about oil demand and anticipation of key economic data, including U.S. inflation figures, set to be released this week. These data points are expected to provide more clarity on the Federal Reserve’s next moves.
The markets are currently divided on whether the Fed will opt for a 25 basis points or 50 basis points cut at its next meeting in September. Traders are pricing in a total of 100 basis points in cuts for the year. U.S. producer price data for July, due later in the day, could impact the core personal consumption expenditures (PCE) measure, which is closely watched by the Fed.
Monetary policy in the Gulf Cooperation Council (GCC) countries is typically aligned with the Fed’s decisions, as most regional currencies are pegged to the U.S. dollar.
Dubai’s main share index dropped 0.4%, with sharia-compliant lender Dubai Islamic Bank falling 1.7% and top lender Emirates NBD down 0.5%. In Abu Dhabi, the index also lost 0.4%, while Qatar’s benchmark index eased 0.2%, impacted by a 0.8% decline in petrochemical maker Industries Qatar.
However, Saudi Arabia’s benchmark index bucked the trend, gaining 0.5%, driven by a 0.9% rise in oil giant Saudi Aramco and a 3% increase in telecoms firm Etihad Etisalat Co.
On Monday, OPEC reduced its forecast for global oil demand growth in 2024, citing weaker expectations for China. This adjustment marks the first cut in OPEC’s 2024 forecast since July 2023 and comes in response to declining diesel consumption and economic challenges in China’s property sector, which have dampened demand.
Outside the Gulf, Egypt’s blue-chip index retreated 1.3%, dragged down by a 1.7% drop in top lender Commercial International Bank.