GCC markets: strong sentiment index surge

Oil at $94 meet inflation concerns and interest rate decisions
GCC markets: strong sentiment index surge
Global markets

In GCC markets, Abu Dhabi (+2.0 percent) advanced the most, marking its most impressive weekly uptick in over seven months. Both Oman (+0.8 percent) and Qatar (+0.8 percent) clocked identical gains, with Qatar boosted by buying support from foreign retail and institutional investors, according to Iridium Advisors.

Kuwait (+0.3 percent) rose for a second consecutive week amid higher crude oil prices. However, Bahrain (-0.5 percent) and Saudi Arabia (-0.5 percent) posted similar losses. The Kingdom hit a three-month low during the week, hurt by weakness in banking and petrochemical stocks. Dubai posted a (-0.6 percent) loss.

The US markets presented a mixed bag. While the Dow Jones (+0.1 percent) partially recovered its past week’s loss, both the S&P 500 (-0.2 percent) and Nasdaq Composite (-0.4 percent) continued their downward trajectory. This softness largely arose from profit-taking and budding concerns over potential rate hikes post the upcoming Fed meeting in September amid gradually firming up crude oil prices, which is feared to keep inflation elevated.

In contrast, European markets closed firmly in the green as the ECB’s rate hike met expectations. The FTSE100 (+3.1 percent) climbed the most, followed by CAC40 (+1.9 percent), STOXX600 (+1.6 percent), and DAX (+1.0 percent).

Read: EFG Hermes collaborates with the Saudi exchange

The Week Ahead: Regional markets – Awaiting the Fed’s next move

Market participants across the GCC are expected to tread lightly and might abstain from making significant moves ahead of the US Fed meeting later this week. While the widespread consensus is that the Fed will leave interest rates unchanged, investors will be focused on accompanying remarks to gauge the direction of future rate paths, given its direct impact on the regional interest rate environment. The corporate agenda this week is relatively thin. Shareholders of Yahsat and Abdullah Saad AboMoati will consider ratifying dividend payouts.

Global markets – Spotlight on FOMC’s decision

In the US, the FOMC meeting will be the highlight for the week. Despite stable rate forecasts, the FOMC might hint at an impending hike. Other focal points include housing starts and unemployment figures. In the EU, Final HICP data will be keenly watched by investors along with inflation metrics from the Eurozone, Germany and France. In the UK, it will be an important week with the release of inflation numbers for August compounded by the BoE’s rate decision a day later. The headline CPI is expected to rise 7.1 percent due to higher energy prices.The

Iridium Quant Lens Sentiment

Iridium’s AI-powered analysis of 2Q 2023 earnings calls, representing 83 percent of the total GCC market capitalization, revealed intriguing insights.

The Index surged +16 percent surge to reach a level of 35.4 points. A unanimous upbeat sentiment echoed throughout the GCC, with Saudi Arabia (+10 percent QoQ) and the UAE (+6 percent QoQ) standing out. A remarkable 54 percent of GCC companies “beat” analyst expectations, up from 45 percent in 1Q 2023, which may partly explain the strong improvement in sentiment for both management teams and analysts and investors. The strong 93 percent correlation between the Iridium GCC Earnings Call Sentiment Index and the MSCI GCC Index since 2020 persists, although sentiment appears to be outpacing the market index in 2Q 2023.

For more on markets, click here.

The stories on our website are intended for informational purposes only. Those with finance, investment, tax or legal content are not to be taken as financial advice or recommendation. Refer to our full disclaimer policy here.