Mideast Stocks: Most major Gulf stocks slide as Fed Chair Powell spooks markets

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Most major Gulf stock markets closed lower on Wednesday after hawkish comments by U.S. Federal Reserve Chair Jerome Powell on the likelihood of higher interest rates rattled investors in the region.

The Fed will likely need to raise interest rates more than previously expected in response to recent strong data, Powell said on the first day of his semi-annual, two-day monetary policy testimony before U.S. lawmakers on Tuesday.

Powell's hawkish stance and lower growth expectations from China affected sentiment in the GCC, said Daniel Takieddine, CEO MENA at BDSwiss. Monetary policy in the six-member Gulf Cooperation Council (GCC) is usually guided by Fed policy decisions because most regional currencies are pegged to the U.S. dollar, directly exposing them to any monetary tightening there.

Saudi Arabia's benchmark index dropped 0.6%, snapping a six-day rally. The index was weighed down by real estate and financial stocks, with luxury real estate developer Retal Urban Development decreasing 1.3% and Al Rajhi Bank shedding more than 1%. In Abu Dhabi, the index extended its loss from the previous session, pressured by a 0.6% decline in conglomerate International Holding Co (IHC). IHC's unit Alpha Dhabi Holding was down 2.1%.

Dubai's main share index also extended declines from the previous session to close 0.1% lower, with toll operator Salik sliding 2.1%. and Dubai Electricity and Water Authority retreating 0.8%.

The Qatari benchmark index, however, bucked the trend to rise 0.3%, its sixth-positive session in a row. The index was boosted by a 3.1% jump in Qatar Islamic Bank and a more than 1% hike in Qatar National Bank , the Gulf's biggest bank by assets. After the market closed on Wednesday, QNB reported a 9% rise in annual net profit after adjusting for hyperinflation related to its business in Turkey.

Outside the Gulf, Egypt's blue-chip index, slipped 0.7%, extending losses to the fifth-consecutive session. The index was dragged down by a 9.1% dive in the country's lone cigarette maker Eastern Company and a 3.3% slide in Fawry Banking & Payment Technology Services. However, Telecom Egypt gained 4.5% after it said on Tuesday that a study to offer an additional stake in the company is in its initial phase.

Egypt is offering to sell a 10% stake in state-controlled Telecom Egypt, sources with knowledge of the offer said on Monday. The Egyptian stock market could follow other markets to the downside after Powell's stance, but upcoming IPOs and the sale of a stake in Telecom Egypt could stimulate the market, added Takieddine.