Dubai's benchmark share index surged to its highest level in over ten years during the Christmas week, reflecting investor optimism even as most other Gulf markets remained muted. On Wednesday, the index rose 0.6% to reach 5,093, marking the highest level seen since September 2013. This rally is significantly influenced by the expectations surrounding the U.S. Federal Reserve's interest rate policies, which have historically impacted Gulf markets due to their currency pegs to the dollar.
Emirates NBD, Dubai’s largest lender, contributed to the positive momentum by climbing 0.8%, and Gulf Navigation saw gains of 1.3%. Shuaa Capital stood out with its considerable increase of 5.5%, reaching its peak over the past three months after reporting the approval of a debt restructuring deal involving significant figures. "Shuaa Capital surged 5.5% to its highest in over three months," the news source reported, reflecting investor confidence stemming from the favorable restructuring news.
Despite Dubai's gains, the overall trend wasn’t mirrored across the Gulf Cooperation Council (GCC) markets. Saudi Arabia's benchmark index fell by 0.2%, largely driven down by key players like the Saudi National Bank, which dropped by 0.9%. Further setbacks were observed with media giant MBC Group, which declined by 1.7%. Meanwhile, Kingdom Holding made headlines with its announcement of acquiring a significant stake worth 1.5 billion riyals (approximately $400 million) in Elon Musk’s artificial intelligence startup, xAI, lifting its share price by 8% at the opening.
Abu Dhabi's market also reflected some bearish sentiment, with its benchmark index slipping by 0.2%, influenced by reductions from conglomerate International Holding and Lulu Retail, which fell by 0.5% and 1.1%, respectively. Similarly, the Qatari benchmark index dipped 0.4%, with most stocks experiencing negative movements. Qatar National Bank, the largest lender plummeted by 0.5%, and Qatar Gas Transport dropped by 1%, contributing to the overall decline.
Market analysts assert the performance of these indices is closely tied to the expectations surrounding the Federal Reserve's future rate cuts. Policymakers have reduced projections for rate cuts significantly, now envisaging only 50 basis points for 2025 instead of previously expected 100 basis points. This change, coupled with rising inflation forecasts, leads traders to anticipate merely about 35 basis points of easing for 2025. "Traders are pricing in just about 35 basis points of easing for 2025," was noted by the news source, emphasizing the cautious approach by investors within the region.
The U.S. Federal Reserve's decisions are pivotal for the Gulf region’s monetary policy as these economies largely hinge on the health of the American economy. Although Dubai's stock market has triumphed during this festive period, analysts remain wary of potential headwinds if the Fed maintains its current interest rate stance longer than anticipated.
Overall, Dubai's stock market performance during Christmas week highlights both resilience and optimism amid fluctuative global monetary policies. With key stakeholders actively reshaping their portfolios and sectors adjusting to new realities, the interplay between local market dynamics and international economic shifts will continue to draw investor attention going forward.
