OPEC+ output cut decision major point of interest for GCC equity market investors

Economic data takes center stage in global markets
OPEC+ output cut decision major point of interest for GCC equity market investors

The recent US Senate bill that raised the nation’s debt limit provided a much-needed boost to global markets, and the ripple effects are expected to be felt in the equity markets of the Middle East region. However, investors may have to remain cautious as the OPEC+ meeting held yesterday could have a significant impact on the markets.

With the recent decision by OPEC+ to extend oil production cuts until next year, the Middle East’s oil-reliant economies are bound to feel the impact of this development. Given the region’s heavy reliance on oil exports, this decision is likely to be a major point of interest for investors, who will be closely monitoring the ensuing effects on the equity markets in the region.

Results for the week ending June 4 reveal that the GCC markets closed with mixed outcomes, according to a new analysis by investor relations consulting firm Iridium Advisors. Qatar (-2.4%) was weighed down by industrial and banking stocks. Saudi Arabia registered a -1.5% decline as oil prices fell due to a strong US dollar and weaker-than-expected manufacturing data from China. Abu Dhabi (-0.5%), Oman (-0.2%) and Bahrain (-0.2%) registered minor losses.

While Bahrain ended its six-week gaining streak, Kuwait broke its six-week losing streak with an increase of (+0.3%). Dubai saw a rise of (+1.7%), partly due to the performance of DIB, Emaar Properties, and Salik. US markets rallied following the Senate’s bill that increased the US debt ceiling.

Read more: Debt ceiling key factor impacting GCC market performance- Report

Additionally, a report showing a more significant increase in US jobs in May bolstered the markets further. The Dow Jones (+2.0%) and Nasdaq Composite (+2.0%) both saw gains, closely followed by S&P 500 (+1.8%). In contrast, European markets ended on a mixed note. The CAC40 and FTSE100 slipped, decreasing by (-0.7%) and (-0.3%) respectively, while the DAX and STOXX600 saw minor increases of (+0.4%) and (+0.2%), respectively.

Global markets

Global markets – Economic data to be in focus as debt ceiling discussion ends with the US debt ceiling debate now behind us, the spotlight in the US refocuses on key economic indicators. Significant among them are the service index figures, anticipated to climb to 52.5 from 51.9. Additionally, jobless claims and trade deficit statistics will command investors’ attention. Across the pond in the EU, GDP data, Services PMI, and PPI data will pique the curiosity of investors. The UK, expected to have a quieter week, will nevertheless monitor the service PMI. This watchful period will precede the anticipation of inflation data and Bank of England rate decisions due in the upcoming weeks.

GCC net foreign flows continue in May 2023

The GCC region recorded net foreign inflows of slightly over half a billion US dollars ($503 million) for a second consecutive month in May. While data for Kuwait and Bahrain was not available at the time of publication, among the remaining markets, only Abu Dhabi recorded a net outflow of $43 million. Dubai, on the other hand, registered a net inflow of $280.4 million, the highest in the GCC, which helped the UAE record a net inflow in May 2023 after posting net outflows in the previous four months. Foreigners remained net buyers in Qatar for a second month as they poured in $ 166 million. The foreign investors continued to favor Saudi Arabia ($95 million) and Oman ($5 million), which recorded net inflows for the 8th and 7th consecutive months, respectively.

For more news on markets, click here.