Dubai June 16 2022: Most stock markets in the Gulf ended lower on Thursday, after the U.S. Federal Reserve delivered an aggressive rate hike and cut its growth projections.
The U.S. central bank on Wednesday approved its biggest interest rate hike since 1994, lifting the target federal funds rate by 75 basis points to a range of between 1.5% and 1.75%. Fed officials also see further steady rises this year, targeting a federal funds rate of 3.4% by year-end.
Dubai’s main share index (.DFMGI) slid 1.7%, underperforming the region, with sharia-compliant lender Dubai Islamic Bank (DISB.DU) falling 3.6% and blue-chip developer Emaar Properties (EMAR.DU) retreated 1.3%.
The Central Bank of the United Arab Emirates said on Wednesday it increased its base rate by three-quarters of a percentage point to 3%, moving in parallel with the U.S. Federal Reserve’s hike as its currency is pegged to the dollar.
In Abu Dhabi, the index (.FTFADGI) fell 0.8%, hit by a 0.9% decline in the country’s biggest lender First Abu Dhabi Bank (FAB.AD).
Saudi Arabia’s benchmark index (.TASI) dropped 1.3%, falling for a fifth consecutive session, dragged down by a 3.7% fall in the Al Rajhi Bank (1120.SE).
The Saudi stock market continued its decline while the Fed’s decision added more pressure on the market, said Farah Mourad, Senior Market Analyst of XTB MENA.
“The market could find some support if oil prices stabilize.”
Oil prices, a key catalyst for the Gulf’s financial markets, erased early gains to fall to two-week lows on the back of inflation concerns, though tight oil supply limited losses.
The Saudi Central Bank said on Wednesday it increased its key interest rates by 50 basis points after the Fed move.
The Qatari index (.QSI) lost 0.5%, with petrochemical maker Industries Qatar (IQCD.QA) retreating 2.3%.
Outside the Gulf, Egypt’s blue-chip index (.EGX30) finished 1% lower, as most of the stocks on the index were in negative territory including top lender Commercial International Bank (COMI.CA), which was down 1.8%.
