Mideast Stocks: Gulf stocks subdued on hawkish Fed chief Powell; Saudi gains

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Gulf equities were subdued on Thursday after the U.S. Federal Reserve chief's hawkish comments on higher and faster interest rate hikes dampened investor sentiment, but strong economic data propelled Saudi Arabia's index to a higher close.

U.S. Federal Reserve chief Jerome Powell had stuck to his message of higher and potentially faster interest rate hikes during a hearing on Wednesday. Aggressive rate hikes may pose challenges for the Gulf economy as most Gulf Cooperation Council (GCC) countries have their currencies pegged to the dollar and generally follow the Fed's policy moves, exposing them to any monetary tightening.

Oil prices, which are highly correlated to Gulf financial market moves, were mostly trading on the back foot after tepid growth data from China and on worries that higher interest rates in the United States could slow global economic growth, squeezing oil demand.

Saudi Arabia's benchmark stock index gained 0.5%, boosted by gains in almost all the sectors with financial and energy shares, with Al Rajhi Bank advancing 1.4% while index heavyweight and state oil giant Saudi Aramco, which will report its annual earnings on Sunday, was up 0.9%. The Saudi economy grew 5.5% year-on-year in the fourth quarter of 2022, slightly more than expected, as non-oil activity boosted overall growth.

The strong economic data has improved sentiment despite the uncertainty surrounding around Powell’s testimony and volatile oil prices, said Ahmed Negm, Head of Market Research MENA at XS.com.

In Abu Dhabi, the benchmark index dropped 0.8%, its third straight day of decline, weighed down by a 3.3% dive in top lender First Abu Dhabi Bank, its biggest intraday fall in more than a month. Elsewhere, Bank of Sharjah is set to raise $500 million for a sale of senior unsecured five-year bonds. Stock was down 2.5%.

Dubai's main share index also extended losses for a third consecutive session to close 0.5% lower, pressured by a 2.3% retreat in its biggest lender Emirates NBD and a 1.4% decrease in blue-chip developer Emaar Properties. The Qatari benchmark index declined 0.3%, snapping a six-day rally but ended the week with a 1.1% gain.

Qatar National Bank, the Gulf's biggest bank by assets falling 1.4% and Qatar Navigation (Milaha) shedding 2.6%.

Outside the Gulf, Egypt's blue-chip index, closed 0.9% higher, ending a five-session losing streak, with Commercial International Bank Egypt gaining 1.4%.