Gulf markets rise ahead of critical US inflation data
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Most stock markets in the Gulf region traded higher on Wednesday morning, buoyed by anticipation of U.S. consumer price data that could shape the Federal Reserve’s monetary policy trajectory. The upcoming data is expected to show a modest 0.2% increase in the core measure, but a stronger reading could renew pressure on global equities and bonds.
Saudi Arabia leads gains amid softening inflation
Saudi Arabia’s benchmark index (TASI) advanced 0.3% in volatile trading. The rise was bolstered by a 1.8% gain in Saudi National Bank, the country’s top lender. The kingdom’s annual inflation rate showed a slight decline, easing to 1.9% in December from 2% in November, according to newly released government data. This softer inflation reading provided some support to market sentiment.
Dubai and Abu Dhabi indices edge higher
Dubai’s main index (DFMGI) rose 0.2%, led by a 0.8% increase in Emaar Properties, the blue-chip real estate developer. In Abu Dhabi, the index (FADGI) ticked up 0.1%, reflecting steady investor confidence.
Oil prices: a key catalyst
Oil prices, a critical driver for Gulf economies, recorded gains after trimming losses from the previous day. The market’s focus remains on potential supply disruptions from sanctions targeting Russian oil tankers. However, the extent of these disruptions and their impact on supply dynamics are yet to become clear, capping further price increases.
Qatar index under pressure
While most Gulf markets posted gains, Qatar’s main index (GNRI) slipped 0.2%. The decline was driven by a 0.8% drop in Qatar National Bank, the region’s largest lender, which weighed on overall performance.
Monetary policy and Gulf markets
Monetary policy in the six-member Gulf Cooperation Council (GCC) tends to follow the Federal Reserve closely, as most regional currencies are pegged to the U.S. dollar. The U.S. producer price data released overnight showed surprisingly tame results, with the core measure flat for December. This has temporarily eased concerns over aggressive rate hikes, but the consumer price data due later today will be pivotal in determining market direction.
Outlook
As Gulf markets react to both regional economic data and global monetary signals, the focus remains on how U.S. inflation data will influence the Federal Reserve’s decisions. The interplay between oil prices and monetary policy will continue to shape investor sentiment in the coming weeks.
Saudi Arabia leads gains amid softening inflation
Saudi Arabia’s benchmark index (TASI) advanced 0.3% in volatile trading. The rise was bolstered by a 1.8% gain in Saudi National Bank, the country’s top lender. The kingdom’s annual inflation rate showed a slight decline, easing to 1.9% in December from 2% in November, according to newly released government data. This softer inflation reading provided some support to market sentiment.
Dubai and Abu Dhabi indices edge higher
Dubai’s main index (DFMGI) rose 0.2%, led by a 0.8% increase in Emaar Properties, the blue-chip real estate developer. In Abu Dhabi, the index (FADGI) ticked up 0.1%, reflecting steady investor confidence.
Oil prices: a key catalyst
Oil prices, a critical driver for Gulf economies, recorded gains after trimming losses from the previous day. The market’s focus remains on potential supply disruptions from sanctions targeting Russian oil tankers. However, the extent of these disruptions and their impact on supply dynamics are yet to become clear, capping further price increases.
Qatar index under pressure
While most Gulf markets posted gains, Qatar’s main index (GNRI) slipped 0.2%. The decline was driven by a 0.8% drop in Qatar National Bank, the region’s largest lender, which weighed on overall performance.
Monetary policy and Gulf markets
Monetary policy in the six-member Gulf Cooperation Council (GCC) tends to follow the Federal Reserve closely, as most regional currencies are pegged to the U.S. dollar. The U.S. producer price data released overnight showed surprisingly tame results, with the core measure flat for December. This has temporarily eased concerns over aggressive rate hikes, but the consumer price data due later today will be pivotal in determining market direction.
Outlook
As Gulf markets react to both regional economic data and global monetary signals, the focus remains on how U.S. inflation data will influence the Federal Reserve’s decisions. The interplay between oil prices and monetary policy will continue to shape investor sentiment in the coming weeks.