Navigating through volatility in GCC and global markets

US indices revealed a concerning trend
Navigating through volatility in GCC and global markets
Global markets

In GCC markets, Qatar (+0.4 percent) rose the most, primarily driven by industrial stocks. Kuwait (+0.1 percent) ended its three-week losing streak, according to Iridium advisors. However, Bahrain (-0.5 percent) slipped for a third straight week, closely followed by Dubai (-0.6 percent). Abu Dhabi (-1.0 percent) was adversely affected by the banking sector. Oman (-2.3 percent) and Saudi Arabia (-2.7 percent) both reversed their last week’s gains. The Saudi Exchange weakened as the IMF revised KSA’s 2023 economic growth forecast downward, principally due to the extension of oil production cuts.

US indices revealed a concerning trend, with the Dow Jones (-0.7 percent), S&P 500 (-1.3 percent), and Nasdaq Composite (-1.9 percent) all in the red. The markets are under strain due to escalating concerns about global economic stability, especially in China, and looming interest rate hikes, further fueled by rising oil prices hinting at enduring inflation.

European markets also clocked losses. The CAC40 (-0.8 percent) and STOXX600 (-0.8 percent) posted identical losses, followed by the DAX (-0.6 percent). The FTSE100 (+0.2 percent), however, ascended further.

GCC markets – Anticipating some volatility this week

Mixed movements in the GCC equities markets could continue, potentially finding support from a rise in crude oil prices, while global economic health and fluctuations in US interest rates pose significant headwinds. Notably, Brent crude surpassed the USD 90 per barrel mark, owing to an unexpected extension of voluntary oil cuts by a cumulative 1.3 million bpd by Saudi and Russia until the end of 2023. Corporate events to watch include 2Q23 earnings calls from GIC and Oman Oil. Meanwhile, shareholders of Agthia and Al Mawarid will deliberate on dividend distributions, and Al Gassim and Arab Sea are set to discuss stock splits.

Read: Brent Crude approaches $90 and mixed results for GCC markets

Global markets – US inflation and UK employment data to be in focus

Investors in the US are gearing up for a week focused on inflation and retail sales data, with consumer spending anticipated to dampen due to increased gasoline prices and debt levels. In the European Union, the spotlight is on the forthcoming ECB meeting, with speculation surrounding the potential end of the tightening cycle. On the data front industrial production data will be released during the week.

Concurrently, the UK braces itself for significant economic data releases ahead of the next monetary policy meeting, with industry experts predicting a potential rate hike.

GCC Net Foreign Flows

The GCC region continued to charm foreign investors, attracting net inflows of $128.2 million in August, marking a positive streak that commenced in June. The UAE, encompassing Dubai and Abu Dhabi, led the charge with a net inflow of $263.9 million,

predominantly spearheaded by Dubai. This influx, however, was partially tempered by Kuwait’s outflow of approximately $140.6 million. Meanwhile, Saudi Arabia remained a favorite, witnessing consecutive net investments for the eleventh month, totaling $39.0 million.

Interestingly, Oman reversed its trend, registering $3.2 million in net inflows, whereas Qatar experienced a slump with $37.2 million in net outflows.

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