Due to growing anticipation that the US Federal Reserve will soon lower interest rates, the majority of Gulf stock markets closed Monday's trading session higher. Investor mood held steady, according to Reuters, as traders continued to bet on future easing of U.S. monetary policy.
Rate cuts by the Federal Reserve are anticipated to begin during their meeting on September 17–18. According to market odds, which were derived by Reuters using information from the CME FedWatch tool, there is a 67% chance of a 25 basis point cut and a 33% chance of a larger 50 basis point cut. A number of important U.S. economic reports, such as job openings, private payrolls and jobless claims, are closely watched by investors this week. The employment report on Friday is expected to be the main focus as it may influence the Fed's next action.
The U.S. dollar is the benchmark for the majority of Gulf currencies. Thus, the central banks in the area frequently take the Fed's lead. Therefore, the Gulf financial markets would probably be impacted by a rate cut in the US.
UAE: Dubai's primary index increased by 0.7%. Emirates NBD, the biggest bank in Dubai, increased by 1.5%, while Emaar Properties surged by 3.2%. A general feeling of optimism helped Abu Dhabi's index rise by 0.3% as well.
The market in Qatar saw strong gains, rising 1.1%. With a 2.6% increase, Qatar Islamic Bank took the lead. In a related development, QatarEnergy declared that it would more than double its urea production to 12.4 million tons annually from the current 6 million tons. The CEO of the company announced the news at a press conference, but he did not give a precise date.
Cairo's stock market was struggling outside the Gulf. As a result of EFG Holding's 3.6% decline, the blue-chip index dropped 0.6%. The Egyptian Central Bank is expected to maintain interest rates at current levels in order to fight inflation, according to a Reuters poll of analysts.
MENAFN emphasized that recent increases in Gulf markets were bolstered by data indicating a rate reduction in the US economy. The July increase in the Personal Consumption Expenditures (PCE) index was 0.2%, according to data from the U.S. Commerce Department. The U.S. economy, which is driven by consumer spending, experienced a 0.5% growth during this period. The likelihood that the Fed will soon ease monetary policy has increased in light of these figures.
Earlier, Saudi stocks rose 0.4% on the back of Al-Taiseer Group and Al-Rajhi Bank, according to MENAFN. Qatar's market also rose by 0.3%, helped by a 1.5% increase in Masraf Al Rayan shares. In Egypt, the blue-chip index rose 0.4%, boosted by a 1.7% increase in Talaat Moustafa Group shares. Egypt's net foreign assets increased for the third month in a row in July, marking a significant recovery after two years of deficits, according to Central Bank data.
This week, all eyes are on upcoming US economic data and the Fed's next steps, which could influence global and Gulf markets in the coming days.
