Saudi Arabia’s stock market concluded Sunday on a lower note, reflecting investors’ cautious stance as they assessed recent U.S. economic data to gauge the potential timeline for a decrease in borrowing costs. This comes as U.S. consumer prices saw a more significant increase than anticipated in December, especially in sectors like housing and healthcare. These developments suggest that it might be premature for the Federal Reserve to initiate interest rate cuts.
Additionally, the prospects of a rate cut in March have been dampened by recent labor market data indicating a relatively stable employment situation. This was evidenced by a surprising drop in new unemployment claims last week.
The Saudi benchmark index (.TASI) witnessed a 0.5% decline, marking its fifth consecutive session of losses. This downturn was partly driven by a 0.7% drop in Al Rajhi Bank (1120.SE) and a 0.8% decrease in Saudi National Bank (1180.SE). Bahrain and Kuwait’s stock markets also experienced slight declines.
In the Gulf region, where monetary policy often aligns with the Federal Reserve due to the U.S. dollar peg of most regional currencies, these developments in the U.S. have a ripple effect.
Contrasting this trend, Egypt’s blue-chip index (.EGX30) surged by 1.8%, bolstered by a 6% jump in Talaat Mostafa Group Holding (TMGH.CA). This follows news of Abu Dhabi wealth fund ADQ acquiring a 40.5% stake in ICON, Talaat Moustafa Group’s hospitality branch, signaling increased interest in Egypt’s luxury hotel sector.
Meanwhile, Qatar’s index (.QSI) saw a 0.4% increase, led by telecom giant Ooredoo (ORDS.QA) which rose by 2.8%.
In related news, oil prices climbed by 1% on Friday. This hike was influenced by a growing number of oil tankers altering their routes away from the Red Sea, in response to the recent U.S. and British air and sea strikes on Houthi targets in Yemen. These strikes were a countermeasure to attacks on shipping routes by the Iran-backed group.
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