Major Gulf Stock Markets Decline as Monetary Policy Impact Digested

On November 20, stock markets across the Gulf region experienced declines during early trading hours. This market movement comes as investors seem to have already accounted for anticipated global monetary policy relaxations for the coming year. Changes in U.S. monetary policy, which are largely not expected to include further interest rate hikes in December or the following year, have been closely watched by Gulf investors due to the influence these have on regional financial decisions.

Impact of U.S. Monetary Policy

Monetary policies in nations that form the Gulf Cooperation Council (GCC), which consists of six Middle Eastern countries, often align with the U.S. Federal Reserve's decisions. This is a result of the regional currencies' peg to the U.S. dollar. Despite the expectations of policy easing by the Fed, suggesting a 30% chance of easing beginning in March, Gulf markets still trended downward.

Saudi Market Interrupts Winning Streak

Saudi Arabia's main index noted a 0.3% decrease, putting an end to four consecutive sessions of upward gains. Key players such as ACWA Power and the Saudi Electricity Co saw losses in their share values. Noteworthy is Saudi Aramco's announcement of two new gas field discoveries on Sunday. Yet, Aramco's share prices also saw a dip of 0.6%.

Various Gulf Markets Show Diverging Trends

Other Gulf markets displayed a mix of trends. Dubai's main index remained unchanged, while Abu Dhabi's index dropped slightly, influenced by a decrease in the shares of First Abu Dhabi Bank. Meanwhile, Qatar's market index fell by 0.4%, impacted by the decline in shares of Qatar National Bank, the largest lender in the Gulf.

In the geopolitical arena, reports suggested a tentative deal involving Israel, the U.S., and Hamas to pause hostilities in Gaza in exchange for freeing hostages. However, official confirmation of such an agreement has not been provided yet.

Stocks, Markets, Economy