Major Gulf markets mixed as Fed rate bets offset higher oil prices
Gulf stock markets have a mixed performance as higher oil prices are offset by concerns over potential interest rate hikes by the US Federal Reserve.
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Posted 8/28/2023, 8:34:00 AM
reuters.com
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Most stock markets in the Gulf ended lower due to a slightly hawkish outlook from the US Federal Reserve, with Abu Dhabi, Qatar, and Saudi Arabia experiencing declines.
Gulf stock markets ended mixed as China's measures to support its markets provided some relief, while energy market volatility weighed on sentiment.
Global markets show mixed performance, with Japan, China, Hong Kong, India, and Australia experiencing modest gains, while the US markets closed higher fueled by optimism over a possible pause in interest-rate hikes, as oil prices extend gains and gold prices remain near three-week highs.
U.S. stock futures are mixed as investors await economic data and assess the possibility of the Federal Reserve ending its interest rate hiking campaign, while Chinese manufacturing contracts, increasing pressure for stronger economic support from Beijing.
Most stock markets in the Gulf ended lower as investors grew cautious due to volatile oil prices and awaited monetary policy decisions by the US Federal Reserve.
Most stock markets in the Gulf rose in response to a rise in oil prices, except for the Saudi index which closed lower; however, the International Monetary Fund predicts a further slowdown in Saudi Arabia's GDP growth due to the extension of oil production cuts.
World stock prices were mostly higher as investors awaited updates on U.S. inflation and China's economic data, while oil prices remained mixed amid concerns of ongoing inflation.
Gasoline prices are rising due to oil supply cuts in Saudi Arabia and Russia, as well as flooding in Libya, but some experts believe that increasing oil prices will not have a significant impact on the US economy and do not expect them to rise much higher in the next year or two due to factors such as increased US oil production, slow global economic growth, and the green energy transition. However, high oil prices can lead to higher inflation, potential recession, and could influence the Federal Reserve to raise interest rates, but the impact may not be as severe as in the past, and some experts recommend investing in the energy transition and adopting a more defensive investment strategy.
Stock indices are in the red as oil prices continue to rise, with Chevron's CEO predicting prices could reach $100 per barrel due to reduced US shale oil output and OPEC's supply cuts, while the US Federal Reserve is holding off on easing liquidity until there is a significant reduction in wages to counterbalance a current yearly wage increase of 4.3% and maintain a 2% inflation rate.
Mixed signals on inflation from various countries and uncertain oil prices create ambiguity ahead of the Federal Reserve's policy decision, causing a holding pattern in global markets.