Gulf stock exchanges closed the weekend with collective weekly gains in the third week of June, benefiting from a qualitative jump in investor sentiment following a temporary ceasefire framework agreement between Washington and Tehran.
This overall positive result came despite most indices taking profits at the end of the week, in response to hints from the new US Federal Reserve Chairman, Kevin Warsh, about the possibility of a tight monetary policy this year to fight inflation, which raised market bets on an interest rate hike next September. The weekend sessions witnessed an active and exceptional liquidity injection that coincided with the start of the quarterly review of the FTSE global indices.
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The Saudi market index "TASI" recorded a weekly growth of 0.7%, achieving its second consecutive weekly gain and the highest pace of rise in two months, despite closing Thursday's session slightly higher below 0.1% amid active liquidity exceeding 6.5 billion riyals.
The performance of blue-chip stocks in the Kingdom was mixed, with Ma'aden climbing 3% to hit a one-month high, while Saudi Aramco fell 0.3% to its lowest levels in more than three months.
Aramco Chairman Yasser Al-Rumayyan said the global oil giant is seriously considering expanding its storage facilities around the world, as a precautionary step following the disruption of energy supplies through the Strait of Hormuz due to the Iran war.
Liquidity jump in Qatar and Kuwait
The Qatar Stock Exchange (QSE) posted its highest weekly gain in two months after its general index jumped 2.4% over the week, overcoming selling pressure for Thursday's session, which saw a decline of 0.6%, with Ooredoo and Industries Qatar shares falling by 2% and 1.5%, respectively.
Trading values in Doha jumped to about 860 million riyals in the weekend session, with the direct support of the implementation of the FTSE review, coinciding with the release of data on the slowdown of the annual inflation rate in Qatar to 2.2% during the month of May, compared to about 2.6% in the previous April.
Kuwait's First Index ended the week 0.4% higher, while the main index rose 0.7%, absorbing the third consecutive daily loss of Thursday's session, in which the First Index fell by 0.6%, pressured by the decline of KFH by 1.7% and National Bank of Kuwait by 0.9%. Trading values on Boursa Kuwait doubled to reach KD 220 million by the end of the week, recording the highest daily liquidity witnessed in the market in 16 months due to global fund inflows.
Strong gains for UAE markets
The Dubai Financial Market (DFM) index rose 3.5% for the week, posting its fourth consecutive weekly gain, overcoming Friday's 1.7% decline in which the index fell from three-month highs on the back of a 4% drop in Emirates NBD's share price in its biggest daily loss in two and a half months. Amanat's relative stability in Dubai was supported by a 0.8% rise following the company's announcement of the completion of the acquisition of an additional 10% stake in Cambridge Health Group for AED 105 million.
The FTSE Abu Dhabi index jumped 2.2% on the weekly basis for its second consecutive weekly gain, despite the index falling by about 1% in Friday's session under collective pressure from blue-chip stocks, led by First Abu Dhabi Bank, whose shares fell 2.2%.
Gulf economic sources indicated that these collective rises in the Gulf capital markets came as an immediate translation of the reduction in the geopolitical risk premium in the region following the announcement of the interim framework agreement between Washington and Tehran.
Gulf analysts linked the sustainability of these gains to the extent to which the regional economy is able to absorb the hawkish hints of new Fed Chair Kevin Warsch, especially with investors' bets on interest rate hikes escalating next September, making foreign cash flows through FTSE reviews a key pillar of support for Gulf indices in the face of global oil market volatility and inflationary pressures.
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