Stock markets in the United Arab Emirates (UAE) witnessed a surge in closing values on Friday, buoyed by the twin forces of rising oil prices and the Federal Reserve’s indication of potential future interest rate cuts.
The price of oil, a pivotal factor influencing Gulf economies, was poised for its first weekly upswing in two months.
This development followed a bullish projection from the International Energy Agency (IEA) concerning oil demand for the forthcoming year.
As a result, Brent futures saw an increase of 23 cents, reaching $76.84 per barrel at 1123 GMT.
Earlier in the week, the U.S. Federal Reserve opted to maintain the existing interest rates.
Federal Reserve Chairman Jerome Powell also stated that the era of unprecedented monetary policy tightening may be drawing to a close, attributed to a more rapid decline in inflation than initially anticipated.
Monetary policies within the Gulf Cooperation Council (GCC), which includes the UAE, typically align with decisions made by the Federal Reserve due to the pegging of most regional currencies to the U.S. dollar.
Dubai’s primary stock index (.DFMGI) posted a 0.5% increase, marking its fourth consecutive positive session.
This surge was led by substantial gains in the financial sector, with Emirates NBD Bank (ENBD.DU), the largest lender in Dubai, experiencing a 1.5% uptick, and Dubai Investments (DINV.DU) climbing by 3.6%.
The index rounded off the week with a 1.25% gain, bouncing back after three weeks of losses.
Abu Dhabi’s index (.FTFADGI) also witnessed a 0.2% boost, primarily driven by a nearly 2% increase in Abu Dhabi Commercial Bank (ADCB.AD).
Notably, ADCB announced the sale of its 80% stake in Abu Dhabi Commercial Properties (ADCP) to Nine Yards Plus Holding in a transaction valued at 591 million dirhams ($160.94 million).
First Abu Dhabi Bank (FAB.AD), the UAE’s largest lender, recorded a 0.9% gain.
In a separate development, Abu Dhabi National Oil Co (ADNOC) was nearing a deal with Austria’s OMV (OMVV.VI) to merge two entities in which both companies held stakes, aiming to create a chemicals conglomerate.
This strategic move involved the merger of petrochemicals group Borealis (owned in a 75:25 split by OMV and ADNOC) and Borouge (54:36 owned by ADNOC and Borealis).
Shares of Borouge, however, dipped by 0.4%.