PC: Business Recorder
Major stock exchanges in the Gulf decreased in early activity this past Monday as investors responded to concern over worldwide economic growth stemming from U.S. tariffs on imports. Uncertainty related to these tariffs had investors fleeing from risky assets, thereby hurting major indices throughout the region.
In an interview with Fox News aired on Sunday, U.S. President Donald Trump refrained from predicting whether the levies he imposed on China, Canada, and Mexico would pull the U.S. into recession. Tariffs trigger concerns among investors since they are viewed as possibly working against growth and piling on inflationary pressures.
The Saudi benchmark index was down 0.6%, with contributing factors a 2.1% decrease in ACWA Power Company and a 2.2% fall for the Saudi Arabian Mining Company. Saudi Aramco, the giant oil company in the region, fell in proportion to the general decrease in the market also by 0.6%. The oil prices which drive most of the Gulf financial markets, were affected by fears regarding U.S. tariffs on global economic growth, along with rising OPEC+ output.
Buoyancy of the overall stock market, Derayah Financial soared at 30% during its debut trading; it hit the maximum daily limit Tadawul allowed to be raised for newly listed stocks in the first three trading days.
The Qatari index also fell by 0.4%, with Qatar National Bank, the largest lender in the Gulf, down by 0.3%. The index in Abu Dhabi lightened 0.1% and also paralleled its regional cautious sentiments.
Additionally weighing on investors are the recent U.S. economic data, highlighted by Friday’s payroll report indicating that jobs increased by fewer than expected numbers in February. The employment report will be the first one to show the impact of President Trump’s trade policy. Investors are now waiting for the important inflation gauges, the Consumer Price Index on Wednesday and the Producer Price Index on Thursday, to help assess the Federal Reserve’s view on interest rates.
Decisions regarding monetary policy in the Gulf Cooperation Council of six countries tend to pretty much follow what the Fed does, since most Gulf currencies are pegged to the U.S. dollar. Thus, any moves in U.S. interest rates can create serious implications for financial markets in the region.
Dubai Market Declines
The Dubai financial index moved down by 0.7%, a reflection of losses over the broad market. Emaar Properties was hit with a 1.1% loss while toll-op Salik was down by 1.8%. The downturn in the Dubai stock market shows investor caution in the light of continuing uncertainty on the global economy.
Gulf Arab markets are most sensitive to external economic developments amid concerns over U.S. trade policies and their potential effects on global growth. Investors will be intently listening for data releases, which would give a gauge of global direction for emerging markets and the direction of monetary policy.
