Shares in Qatar led the decline in Gulf stocks today, Thursday, to record the largest weekly decline in more than two years, amid investors’ fears that raising interest rates to curb inflation would lead to economic stagnation.
Federal Reserve Chairman Jerome Powell said Wednesday that the United States is not planning a recession to stop rising inflation, but is fully committed to restraining prices even if it threatens an economic downturn.
A Reuters poll predicted that the US central bank would raise interest rates by 75 basis points in July, followed by a half percentage point increase in September, and the increase would not decrease to a quarter of a percentage point before November.
In Qatar, the Doha Stock Exchange index closed in fall of 1.6%, with most of the shares in drop. Industries Qatar fell 4.4%. The index recorded a 6.4% weekly decline, which is the largest weekly decline since March 2020.
Dubai’s leading index closed in decline of 1.1%, with Emaar Properties in fall of 1.9%.
In Abu Dhabi, the index fell by 0.6%, with the share of E & Group (formerly Etisalat) in drop of 1.5%.
The main index in Saudi Arabia fell 0.1% to 11,310 points and Sahara International Petrochemical stock fell 3.2%.
Outside the Gulf region, Egypt’s leading equity index fell 1.8%, with Commercial International Bank (CIB) 3%.
Alaa Al Ibrahim, Head of Alawwal Capital’s Capital Markets Funds Sector said the current circumstances are exceptional and make it difficult to make predictions by confusing large investors before small ones, predicting that the pace of interest increases will continue to put pressure on global markets.
In an interview with Al Arabiya, he stressed that market conditions require caution in no indication of the end of the correction period. On the other hand, he saw that the situation in the Saudi market is positive in terms of strength of the Kingdom’s economy, active leading companies and expected positive growth rates, as well as the acceptable inflation rate of less than 3%.
He felt that US monetary policy is subject to the influence of political objectives and said that the US administration sacrifices in to a large extent the United States and the global economy.
He added that there are concerns about rising interest rates and their impact on demand, considering that the solution to the inflation dilemma should be by increasing output rather than increasing the interest rate.
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