Gulf Stock Markets Gain Momentum  

Early on Thursday, most of the Gulf stock markets posted rises on account of investors waiting to absorb what US inflation data and some key economic updates would reflect in the rest of the week. The results were going to influence the policies for monetary policy by the Federal Reserve of the United States during the next few weeks.

PC: Reuters 

U.S. Fed Cuts Rate in December

A Reuters poll of economists shows that there is a probability of 90% in reducing interest rates by the U.S. Federal Reserve by 25 basis points as it holds its Dec. 18 meeting. More analysts are expecting the Fed would hold off on further rate-cutting moves by late January, worried about inflationary influences.

Recently, U.S. labor market data highlighted cooling yet still resilient job growth, further strengthened expectations for a rate cut by the Fed before reconsidering their policies in the early days of next year. Since most Gulf currencies peg to the U.S. dollar-the Saudi riyal being the main example-implementation of such monetary decisions can have vast policy implications in the region’s economy.

Gulf Markets

Saudi Arabia’s benchmark index (.TASI) climbed 0.1%, bolstered by a 0.5% gain in aluminum products manufacturer Al Taiseer Group (4143.SE).  

In Qatar, the blue-chip index (.QSI) rose by 0.4%, driven by a 0.9% increase in Qatar National Bank (QNBK.QA), the Gulf’s largest lender. Similarly, Abu Dhabi’s index (.FTFADGI) edged up 0.1%.  

Oil Prices and China’s Economic Stimulus

Oil prices, a key driver of Gulf financial markets, rose on expectations of increased demand from China. Beijing recently announced a looser monetary policy aimed at stimulating economic growth in the world’s largest crude importer.  

Dubai Market Declines

In contrast to the broader regional trend, Dubai’s main share index (.DFMGI) slipped 0.3%, extending losses to a second consecutive session. The decline was led by a 1.8% drop in Dubai Electricity and Water Authority (DEWAA.DU).  

UAE Tax Policy Update

The United Arab Emirates has announced its decision to implement a minimum top-up tax (DMTT) of 15% on large multinational corporations operating within the country. This new tax policy, which will take effect starting January 2024, is expected to play a significant role in bolstering the country’s revenue streams that are independent of the oil sector.