Dubai – Mubasher: Stock market analysts had mixed thoughts about trends of gulf bourses on Thursday after the Federal Reserve raised its interest rate amid pressure by current oil prices.
The Federal Reserve on Wednesday raised its interest rate to between 0.25% and 0.5%. Brent crude fell 3.30% or $1.28 to $37.45 per barrel.
Market technical analyst Mohammed Al-Anzi expected a fractional increase in Gulf markets. “The rise in US and most European indices will stir up the Gulf investor sentiment in Thursday’s trading, despite the negative impact of the rise in US interest rate,” he told Mubasher.
The US Dow Jones Industrial Index closed Wednesday at 17,749.09 points after leaping 1.28%, the Stoxx Europe 600 Index rose by about 0.12% to 360 points, and German's DAX jumped 0.18% up.
In reaction to the Fed interest rate hike, on Wednesday, Saudi Arabian Monetary Agency raised the rate of Repurchase Agreement (Repo) by 25 points. In Kuwait, the Central Bank upped the discount rate from 2% to 2.25%.
In a relative move, Central Bank of Bahrain also increased its key overnight deposit rates from 0.25% to 0.50%.
“Central banks in other gulf states are expected to increase their interest rates, following the suit of Saudi, Kuwait and Bahrain, in order to avoid the money migration from the their banks to foreign banks," Al-Anzi said.
Financial advisor Mohammed Shamimri agreed with Al-Anzi that gulf’s stock markets will continue rising in Thursday’s trading, especially the Saudi Stock Exchange (Tadawul), saying, in statements to Mubasher, that it will target the level of 6,950 points.
However, financial analyst Mahmoud Abu Zeid suggested that the US interest rate rise will have a negative impact on stock markets, especially in emerging countries
Abu Zeid expected foreign portfolios to escape local markets, “Qatar and UAE’s markets are expected to be the most vulnerable as they are listed in MSCI Emerging Markets Index," he said.
