Saudi Arabia’s stock market got off to a promising start in 2024, riding high on the anticipation of interest rate cuts by the U.S. Federal Reserve later in the year.
This positive sentiment, however, was unique to Saudi Arabia, as the rest of the region’s major markets remained closed.
The markets are currently banking on the Federal Reserve’s intention to initiate interest rate cuts as early as March, marking a significant shift from previous assumptions.
This shift in monetary policy is of particular importance to the six-member Gulf Cooperation Council (GCC), as the region predominantly pegs its currencies to the U.S. dollar, making them highly susceptible to Federal Reserve decisions.
In this optimistic environment, Saudi Arabia’s benchmark index, represented by (.TASI), displayed a robust increase of 0.6%.
This surge was driven by substantial gains across various sectors, with notable performers including Alinma Bank (1150.SE), which saw a remarkable climb of 3.2%, and Saudi Arabian Amiantit Co (2160.SE), which surged impressively by 10%.
One of the standout success stories was the construction materials manufacturer, Amiantit, which managed to settle financial obligations amounting to 572.7 million riyals ($152.73 million) with a local creditor bank, further bolstering investor confidence.
Meanwhile, Oman’s stock index, denoted as (.MSX30), closed with a remarkable 1.5% gain.
This was largely attributed to the outstanding performances of National Bank of Oman (NBOB.OM) and Sohar International Bank (BKSB.OM), which witnessed gains of 3.6% and 3.1%, respectively.
In summary, Saudi Arabia’s stock market set a positive tone for the start of 2024, driven by growing expectations of interest rate cuts by the U.S. Federal Reserve.
As the year unfolds, investors across the Gulf Cooperation Council region will closely monitor these developments, as they continue to be influenced by the Fed’s monetary policy decisions, which have a significant impact on their economies due to their currency pegs to the U.S. dollar.