GCC equity markets started the year on a positive note, in line with most other global indices that witnessed gains at the start of the year, reversing the declines seen during December 2024.
According to Kamco Invest’s latest report, Kuwait was the best-performing equity market in the GCC during the month with a gain of 5.7 percent, the biggest monthly gain in twelve months, highlighting gains across all segments on Boursa Kuwait. Saudi Arabia was next with a gain of 3.1 percent followed by UAE markets, Abu Dhabi and Dubai, with marginal gains of 1.8 percent and 0.4 percent, respectively.
On the other hand, Bahrain’s All Share Index witnessed the biggest decline in the GCC, falling by 5.4 percent during the month to the lowest level in more than 25 months, mainly led by an 18.5 percent fall in shares of one of the largest constituent stocks on the exchange, Aluminum Bahrain. Shares of the company declined to a four-month low after the ongoing merger talks with Saudi Arabia’s Maaden ended during the month.
Earnings, corporate actions to drive markets this week
According to Iridium, earnings and corporate actions are expected to be the key drivers of GCC equity markets this week, though external factors, particularly U.S. policy decisions, may also influence sentiment.
Several companies are set to release their fourth quarter of 2024 results, including ADNIC, ADNOC Gas, Al Salam Bank, Borouge, FAB, IQCD, Jazeera Airways, Multiply Group, NBQ, QEWS and UAB.
Additionally, BSF, DFM, Milaha, and QAMCO will host earnings calls. Meanwhile, Arriyadh Development and Rasan Information Technology will seek shareholder approval for capital increases.
U.S. tariffs in focus
GCC investors will also closely monitor the potential impact of newly imposed U.S. tariffs on Mexico, Canada and China on equity markets, which could drive further appreciation of the U.S. dollar. Additionally, the U.S. non-farm payroll report will be a key focus, given its influence on Federal Reserve policy expectations.
In Europe, the Bank of England is widely expected to cut interest rates by 25 basis points at its February 6 meeting as economic growth weakens. Meanwhile, in Asia, markets will track China’s PMI data and India’s central bank rate decision, with Bloomberg analysts forecasting a possible rate cut.
Last week, the Federal Reserve kept interest rates unchanged and Chair Jerome Powell emphasized that rate cuts will not occur until inflation and employment data support such a move. Powell also noted the uncertain economic backdrop, influenced by policy changes under the Trump administration, including tariffs and tax adjustments.
Despite prior rate hikes, inflation remains above the Fed’s 2 percent target, prompting officials to maintain a cautious stance. Powell reiterated concerns that premature easing could hinder inflation control. As a result, investors now expect the first rate cut by June.
The Fed’s latest statement reflected a “mildly hawkish” stance, signaling patience before any policy shifts. Markets reacted with stocks closing lower, while bond yields and the U.S. dollar remained steady following Powell’s comments.
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Economic data calendar
This week’s macro calendar includes the following releases which may impact the performance of global equity markets:
- China Manufacturing PMI January: February 3
- Eurozone CPI January: February 3
- US Manufacturing PMI January: February 3
- China Services PMI January: February 5
- US Employment change January: February 5
- US Services PMI January: February 5
- Eurozone Retail Sales December: February 6
- BoE Interest rate decision: February 6
- BoE Monetary Policy report: February 6
- US Average Hourly Earnings January: February 7
