Gulf Stock Markets Dip Amid Global Monetary Policy Anticipation

On a day of trading, attention was drawn to the Bahrain Bourse as traders processed the outcome of the U.S. presidential election, with Joe Biden emerging victorious. The impact of U.S. politics on Gulf markets was palpable even on November 20th, 2020, as markets responded to the changing landscape.

Gulf Markets React to Monetary Policy Expectations

Significant stock exchanges in the Gulf region registered declines in early trading sessions on Monday. Investors have seemingly adjusted their expectations for the global monetary policy outlook, anticipating a relaxing of policies in the following year. The markets are discounting the possibility of a U.S. policy rate increase in December or anytime during the next year, reflecting only a 30% probability of policy easing commencing in March.

The Gulf Cooperation Council (GCC), which includes six nations, generally aligns its monetary policy with the U.S. Federal Reserve, a consequence of their currencies' peg to the U.S. dollar.

Saudi Arabia's Market Hits a Bump

The Saudi Arabian market took a hit, with the country's benchmark index (.TASI) losing 0.3%, halting a four-day streak of gains. Leading companies like ACWA Power and Saudi Electricity Co slightly fell in value. Despite recent news of new natural gas field discoveries by oil behemoth Saudi Aramco, its shares also saw a decline.

Elsewhere in the region, Dubai's stock market index showed stagnation, while Abu Dhabi's index felt the pressure with a slight drop catalyzed by a decline in First Abu Dhabi Bank shares. A tentative buzz about a possible ceasefire agreement in Gaza, involving Israel, the U.S., and Hamas, lingered without confirmation.

Qatar's Market Faces a Setback

The Qatari index similarly faced a downturn with a notable decrease in shares of the region's largest lender, Qatar National Bank. These movements indicate a cautious sentiment among investors while they navigate through the intricacies of global finance intertwined with geopolitical developments.

Gulf, Trading, Monetary