Most stock markets in the Gulf ended higher on Wednesday ahead of U.S. inflation data that showed price pressures still simmering, likely ensuring that the Federal Reserve will raise interest rates again next month.
After data last week showed a resilient U.S. labour market, emboldening bets of a 25 basis point hike at the Fed's next meeting in May, investors had been waiting for the inflation print, which saw the CPI increase 5.0% year on year in March, the smallest such gain since May 2021.
Most Gulf Cooperation Council countries, including Saudi Arabia, the United Arab Emirates and Qatar, have their currencies pegged to the U.S. dollar and follow the Fed's policy moves closely, leaving the region exposed to monetary tightening in the world's largest economy.
Saudi Arabia's benchmark index (.TASI) gained 0.8% after two sessions of losses, with Al Rajhi Bank (1120.SE) and oil giant Saudi Aramco (2222.SE) both closing 0.8% higher.
Oil prices - a key catalyst for the Gulf's financial markets - steadied. Clarity around oil demand and supply will come with monthly reports from the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency due on Thursday and Friday, respectively.
Dubai's main share index (.DFMGI) rose 1.5% to mark a new high for the year by some margin, partly buoyed by a 3.5% jump in blue-chip developer Emaar Properties (EMAR.DU).
Analysts pointed to strong local fundamentals with Ahmed Negm, Head of Market Research MENA at XS.com, saying positive developments in local business activity could continue to support an optimistic view among investors.
Abu Dhabi's index (.FTFADGI) added 0.4%, while the Qatari benchmark (.QSI) fell 0.5%, weighed down by a 4.3% drop in Qatar Islamic Bank (QISB.QA).
Outside the Gulf, Egypt's blue-chip index (.EGX30) fell 1.6%, with most of its individual stocks in negative territory, including Egypt Kuwait Holding (EKHO.CA), which was down 8.6%.
XS.com's Negm pointed to elevated inflation and downgraded growth forecasts as factors behind the ongoing pressure on the Egyptian market.
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