Gulf markets retreat as rate cut expectations wane; Abu Dhabi gets boost from IHC

Gulf markets retreat: Most major stock markets in the Gulf witnessed declines during early trade on Wednesday, January 3, mirroring the lower trajectory of Asian shares. The dip in sentiment comes as market optimism regarding early and aggressive US interest rate cuts diminishes, just ahead of the release of Federal Reserve minutes and key jobs data.

Gulf stocks decline: Key highlights

Market tracking and global factors: Gulf markets took cues from the decline in Asian shares, with market sentiment shifting away from expectations of swift US interest rate cuts. The release of minutes from the US Federal Reserve's December meeting and the ISM survey on US manufacturing, scheduled for later on Wednesday, is awaited. Additionally, the closely watched US nonfarm payrolls report is due on Friday.

Fed influence on Gulf monetary policy: The monetary policy decisions in the Gulf Cooperation Council (GCC), comprising six member countries, are often influenced by Federal Reserve decisions, given the pegging of most regional currencies to the US Dollar.

Saudi Arabia's market performance: Saudi Arabia's benchmark index experienced a 0.4 per cent drop, driven by a 1.2 per cent decline in Al Rajhi Bank and a 0.2 per cent fall in oil giant Saudi Aramco. Oil prices, vital to the Gulf's economy, remained relatively stable in Asian trade as markets assessed concerns about the US economy against potential disruptions in the supply chain due to ongoing tensions in the Red Sea.

Saudi non-oil business activity: A survey revealed that non-oil business activity in Saudi Arabia displayed solid growth in December, with new orders registering the fastest pace of increase in six months.

Qatari Index performance: The Qatari index retreated by 1.6 per cent, continuing losses from the previous session, which saw the end of an eleven-session winning streak. Qatar Islamic Bank saw a decline of 2.3 per cent, while Commercial Bank slid by 3.8 per cent.

Dubai's share index: Dubai's main share index recorded a marginal loss of 0.1 per cent, with sharia-compliant lender Dubai Islamic Bank falling by 0.7 per cent.

Abu Dhabi's advance: In contrast, Abu Dhabi's index advanced by 1.4 per cent, buoyed by a notable 3.2 per cent surge in the conglomerate International Holding Company (IHC).

IHC's impressive move: IHC, chaired by Sheikh Tahnoon bin Zayed al-Nahyan, the UAE's national security adviser, made a significant announcement. The conglomerate revealed the establishment of 2PointZero, a holding company boasting assets exceeding $27 billion.

(With Reuters inputs.)