Middle East Markets Rise on Fed Rate Cut Signals and Strong U.S. Data
Middle East stock markets closed higher, buoyed by positive U.S. economic data and potential Fed rate cuts. Egypt announces Olympic bid amidst regional market gains.
On Sunday, August 11, 2024, financial markets across the Middle East concluded on a positive note, influenced by encouraging economic indicators from the United States and indications from Federal Reserve officials regarding potential interest rate reductions.
Three Federal Reserve policymakers expressed increased confidence on Thursday, August 8, that inflation was moderating sufficiently to consider rate cuts as early as September. This sentiment, coupled with better-than-anticipated U.S. unemployment data, contributed to the market's upward trajectory.
The U.S. Department of Labor reported that initial claims for state unemployment benefits decreased by 17,000 to a seasonally adjusted 233,000 for the week ending August 3, 2024. This marked the most substantial decline in approximately 11 months, surpassing economists' projections of 240,000 claims.
It's worth noting that monetary policies in the six-member Gulf Cooperation Council (GCC) typically align with Federal Reserve decisions, as most regional currencies are pegged to the U.S. dollar. The GCC, established in 1981, plays a crucial role in coordinating economic policies among its member states.
In Saudi Arabia, the benchmark index gained 0.6%. Notable performers included Al Taiseer Group, an aluminum products manufacturer, which saw a 5.3% increase, and Saudi National Bank, the country's largest lender, which rose by 2.3%. Saudi Arabia's prominence in the aluminum industry is significant, as it ranks among the world's top producers.
Qatar's index added 0.2%, primarily driven by a 2.3% increase in Qatar Electricity and Water Company. Established in 1990, this company is the primary provider of utilities in the country, which is renowned as the world's largest exporter of liquefied natural gas.
Egypt's blue-chip index advanced 2.7%, with Talaat Mostafa Holding finishing 4.5% higher. Abu Dhabi Islamic Bank Egypt gained 2.5% following a rise in second-quarter net profit. The Egyptian Exchange, one of the oldest in the Middle East with roots dating back to 1883, continues to play a vital role in the region's financial landscape.
In a separate development, Egypt announced its bid to host the 2036 and 2040 Summer Olympics. The head of the African National Olympic Committees Association (ANOCA) emphasized the country's improving infrastructure and sports facilities as key factors for a successful African bid. If successful, this would mark the first time the Summer Olympics are held in Africa or the Middle East since the modern games began in 1896.
"Egypt's improving infrastructure and sports facilities are crucial for a successful African Olympic bid. We believe the time has come for Africa to host this global event."
This ambitious move comes as Egypt continues to demonstrate its capacity for hosting major sporting events, having organized the Africa Cup of Nations five times, most recently in 2019.
As Middle Eastern markets respond positively to global economic signals, the region's financial landscape continues to evolve, reflecting the intricate interplay between local developments and international economic trends.
