Gulf Markets End Mixed On Economic Concerns, Volatile Energy Prices

Tuesday was a mixed day for the Gulf stock markets as the market closed on a not-so-encouraging note. One of the main reasons for the stock market performance was because of the unpredictable nature of the oil prices.

There have been indirect influences on the stock index because of different points of concern around the Oil sector.

Stock markets in the Gulf ended mixed on Tuesday

Oil is one of the chief contributors to the main index of the Gulf stock market and later the increase in the covid-19 cases in China has affected the imports to China, which is the largest oil importer from the Gulf nations.

The nation has been trying to grapple with the ongoing rise in Covid cases together with the decision of the government to remove the ‘Zero-Covid’ measures.

This has been raising concern in the international community also as the administration is trying to install fever screening clinics and increase hospital bed capacities throughout the cities in China. 

Even though the US dollar was supportive in maintaining the market rates and the US is planning to restock its petroleum reserves, the inflation threat around the world and especially in major economies like the US is proving to be concerning.

The Russian-Ukrainian war has also majorly affected the stock markets around the world. 

Saudi Arabia’s index closed at a 0.9 percent fall as Retal Urban Development Co. came down to 1.6 percent and Al Rajhi Bank advanced at 3.7 percent. The National Central Cooling Co. made a surge of 10.1 percent which led Dubai stocks to close at a 0.3 percent index increase value. According to Joint Organizations Data Initiative (JODI), the crude oil export from Saudi Arabia struck a thirty-month high in October.

At the same time, the Qatar stock rose by 0.2 percent with Qatar International Islamic Bank recording a 1.3 percent rise. The Abu Dhabi stock index also recorded a fall of 0.2 percent after some price corrections and a 0.5 percent fall in the country’s biggest lender First Abu Dhabi Bank.

One of the chief concerns of stock traders is the fluctuating oil prices and rising interest rates with high inflation as most of the Gulf currencies are pegged to the US dollar. The US dollar is in a sensitive position for months now as experts are trying to tackle inflation and a possible recession.

The monetary tightening in the US has an almost direct impact on the Gulf Cooperation Countries (GCC) countries. The trend in the gulf stock markets has been discouraging from the last quarter of this year as Gold and oil prices are both showing unpredictable graphs. 

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Even Though the non-oil economy is promising in countries like Saudi Arabia, the UAE, etc Oil is still one of the primary sources of their income. Amidst a staggering performance in the tourism sector and also in other local economic parameters, the Gulf nations are still doubtful about their 2023 performances when it comes to the stock market index and investments.

Major banks and companies in the GCC countries are also facing the heat of the inflating US dollar as the federal rates have spiked numerous times in the past couple of months to equalize the inflation rate.

Economic and financial experts in the US and around the world are warning of a possible global economic depression if the situation continues like this. On top of this, the Russia-Ukrainian war is also contributing to the crisis with economic resources and global trade affected.

The only possible hope is the economic revival from the post-covid phase from 2023 and this can bring the US dollar also into a stable momentum on which the gulf countries can expect a rising stock index.