GCC markets mostly closed lower last week. Qatar (-2 percent) experienced selling pressure from local and foreign retail investors, according to Iridium Advisors. Kuwait (-1 percent) weakened for the second week in a row. Abu Dhabi (-0.4 percent) and Saudi Arabia (-0.4 percent) clocked identical minor losses. The latter was impacted by a drop in Saudi Aramco’s stock amid tepid crude oil prices. Oman registered a mild (-0.2 percent), while Bahrain remained unchanged at (-0.0 percent).
Dubai (+1.2 percent) made gains on the back of strength in banking stocks.
The US markets closed mixed. The Dow Jones index was pressured downwards by (-0.4 percent) due to mounting concerns over the interest rate outlook and a notable sell-off in healthcare giant, J&J.
In contrast, the S&P 500 (+0.8 percent), and Nasdaq Composite (+2.3 percent) rose, spurred by a slew of positive earnings reports, notably from chipmaker Nvidia, and a favorable market reaction to remarks from the Fed Chief at the Jackson Hole Symposium. European markets, meanwhile, partly recouped their losses from the previous week with the FTSE100 (+1.0 percent) rising the highest, followed by CAC40 (+0.9 percent), STOXX600 (+0.7 percent), and DAX (+0.4 percent).
The Week Ahead- Regional markets are anticipating a brighter start
This week could see GCC markets opening on a more optimistic note, mirroring the gains in US equities as a less hawkish tone of the Fed Chief at Jackson Hole than last year cheers up investors. Nevertheless, market dynamics in the days ahead will likely be influenced by global macroeconomic data, especially from powerhouse economies like the US and China, given the correlation with crude oil price performance.
On the corporate agenda, this week RAK Insurance is expected to disclose its 2Q 2023 results. Furthermore, Bank Dhofar, BBK, MIC, NBO, Oman Chlorine, and Voltamp Energy, among others, are slated for earnings calls. Also, Borouge will seek shareholders’ approval for an interim dividend distribution, while Tawuniya will seek a nod for a bonus share issuance.
Read: GCC markets show resilience amidst global turbulence
Global markets – Economic data regains spotlight Post-Jackson-Hole
Post the Jackson Hole Economic Symposium, US investors will turn their focus back to economic indicators. The non-farm payroll data is predicted to reflect a deceleration in private-sector hiring. In Europe, the week is set to be data-heavy with key metrics like the HICP flash estimate for the EU and the publication of ECB accounts. The UK has a leaner economic calendar, with the manufacturing PMI expected to be the primary focal point for investors.
IMF on subsidies
The IMF has released a concerning report highlighting that subsidies allocated to fossil fuels globally soared to an all-time high of $7 trillion in 2022, marking an increase of $2 trillion over a mere two-year period. This surge is attributed to an uptick in fuel consumption driven by a post-pandemic economic rebound and the inflationary pressures on energy prices due to geopolitical tensions, specifically the Russia-Ukraine standoff.
The IMF underscores the ramifications of these ballooning subsidy bills – they strain national budgets and amplify environmental concerns like pollution and global warming. The silver lining is the current conducive environment to phase out these subsidies, given the anticipated relaxation in energy prices.
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