Most stock markets in the Gulf closed lower today, Thursday, as concerns about a global economic slowdown outweighed the impact of high oil prices.
The Federal Reserve this month raised interest rates by 50 basis points, the seventh increase this year. Financial institutions believe that monetary tightening is likely to lead the US economy into recession, which would curb high inflation.
Most of the GCC states, including Saudi Arabia, peg their currencies to the dollar and follow the Fed’s policy footsteps, making the region vulnerable to monetary tightening in the world’s largest economy.
The Saudi stock market index fell 0.6% today, Thursday, affected by a decline of 2% in the share of Al-Rajhi Bank, and the decline in the share of Retal Urban Development by 0.5%.
The index incurred losses for the eighth week, by 0.7% in nine weeks.
On the other hand, the shares of oil giant Saudi Aramco ended trading up 0.3%.
The Japan National Oil, Gas and Minerals Corporation (JOGMEC) said it had renewed an agreement with Saudi Aramco to store crude oil on Okinawa Island for another three years.
In exchange for free storage space for Aramco, Japan would get priority claim on oil stocks in an emergency.
Hussein Al-Raqeeb, Director of the Zad Consulting Center, said in an interview with Al-Arabiya that what the Saudi market is going through reflects a process of correcting the course of subscriptions and the pricing process, which is a good thing for the market in the future.
He explained that the Nomou market is mainly intended for qualified investors, so the decline in it is supposed to be less severe than the main market, as it is not subject to psychological factors that usually affect individual investors, and therefore he believes that there is a clear imbalance in the Nomou market as a result of the subscriptions that took place in the past, as it There was a reluctance to new subscriptions, and two companies canceled offering plans due to poor coverage.
In Abu Dhabi, the index fell 0.3%. However, higher oil prices limited losses.
Oil prices, a major catalyst for financial markets in the Gulf, rose for the fourth consecutive day to their highest levels in two-and-a-half weeks, as stocks of crude, heating oil and jet fuel grew tighter in the United States as a winter storm swept the country.
In Dubai, the main index fell 0.5%, affected by a 1.1% drop in Emirates NBD Bank.
Outside the Gulf region, the leading index of the Egyptian Stock Exchange ended trading down 0.4%, with the share of the Eastern Smoke Company falling 3.5%.
A Reuters poll conducted on Tuesday expected the Central Bank of Egypt to raise the interest rate on overnight deposits by 200 basis points today, Thursday, as part of its attempts to curb soaring inflation after the sharp depreciation of the local currency.