Gulf stocks skidded on Monday as investors took a cautious approach to the US inflation data due on Tuesday and awaited more economic news.
The US inflation data, which will be released on Tuesday, will give investors an idea of the US Federal Reserve’s monetary policy trajectory in the coming months. The Gulf region’s main stock markets all opened lower as investors awaited the data.
In Saudi Arabia, the Tadawul index was down 0.6% in early session trading, while the Dubai Financial Market General Index was down 0.4%. In Abu Dhabi, the ADX General Index declined 0.3%.
Meanwhile, Egypt’s EGX 30 index was up 0.2% on Monday. It has climbed nearly 11% this year, making it the best-performing market in the region.
Despite the overall pessimism, some stocks managed to post gains. In Saudi Arabia, Al Rajhi Bank was up 0.9%, while in Dubai, Emirates NBD rose 0.7%.
In the US, the consumer price index (CPI) rose 0.4% in November, according to the Labor Department. Inflation has been relatively tame in recent months, but it is expected to accelerate in the coming months as the US economy continues to recover from the coronavirus crisis.
The Gulf region’s main stock markets have been largely unaffected by the US inflation data since the region’s markets are more closely tied to oil prices. Oil prices have been on the rise since the start of 2021, bolstered by hopes of a vaccine-driven economic recovery in the US and other parts of the world.
The Gulf region’s markets are also closely linked to expectations for the upcoming earnings season. Companies in the region are expected to report strong earnings growth in the fourth quarter, as the region has largely recovered from the pandemic.
Overall, it looks like investors in the Gulf region are taking a wait-and-see approach to the US inflation data and the upcoming earnings season. Investors in Egypt, however, seem to be more optimistic, sending the EGX 30 index up today. The region’s markets will likely remain volatile in the coming weeks as investors adjust their portfolios in anticipation of the US inflation data and the earnings season.