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Saudi stock market sees biggest fall since November 2021

Saudi Arabia, the world's top oil exporter, will reap the benefits of rising oil prices Reuters
Saudi Arabia slid 4.4%, its biggest intraday fall since November 2021, as oil behemoth Saudi Aramco retreated 4 percent
  • Investors worried that inflation-fighting central banks could damage economic growth
  •  Saudi Arabia’s benchmark index slid 4.4%, as stocks fell across the board
  •  Oil prices, a key catalyst for the Gulf’s markets, tumbled about 6%

Stock markets in the Gulf registered steep losses on Sunday, as investors worried that tighter monetary policy by inflation-fighting central banks could damage economic growth.

On Wednesday, the US central bank approved its biggest interest rate hike since 1994, lifting the target federal funds rate by 75 basis points to a range of between 1.5 percent and 1.75 percent.

Fed officials also see further steady rises this year, targeting a federal funds rate of 3.4 percent by the year-end.

Saudi Arabia’s benchmark index slid 4.4 percent, its biggest intraday fall since November 2021, as stocks fell across the board including oil behemoth Saudi Aramco, which retreated 4 percent.

Oil prices, a key catalyst for the Gulf’s financial markets, tumbled about 6 percent to a four-week low on Friday on worries that interest rate hikes by major central banks could slow the global economy and cut demand for energy.

The Saudi Central Bank said on Wednesday it increased its key interest rates by 50 basis points moving in tandem with the US Federal Reserve’s hike.

The Saudi Central Bank, also known as SAMA, lifted its repo and reverse repo rates by 50 bps to 2.25 percent and 1.75 percent, respectively. The Saudi riyal is pegged to the dollar.

The Qatari index declined 3.5 percent, as all the stocks on the index were in negative territory.

Petrochemical maker Industries Qatar plunged more than 5 percent, while Qatar Islamic Bank dropped 2.9 percent.

Investors are taking a pessimistic stance as natural gas prices continue to drop from their peak, Eman AlAyyaf, CEO of EA Trading.

“The main index could decline further along with other markets in the region and as the uncertainties in the gas markets remain.”

Last week, the Central Bank of Qatar also raised its main deposit rate by 75 basis points (bps) to 2.25 percent.

The Qatari and Saudi riyal, like most Gulf currencies, are pegged to the dollar.

Outside the Gulf, Egypt’s blue-chip index was down 1.4 percent, dragged down by top lender Commercial International Bank.

According to Alayyaf international investors continued to withdraw and the bourse could see more selling pressure as investors shift away from risk.

SAUDI ARABIA fell 4.4 percent to 11,299

QATAR lost 3.5 percent to 12,120

EGYPT lost 1.4 percent to 9,728

BAHRAIN down 1.1 percent to 1,832

OMAN was flat at 4,121

KUWAIT dropped 3.3 percent to 7,944