Major Gulf markets drop on lower oil prices | Reuters

Major Gulf markets drop on lower oil prices | Reuters

Major stock markets in the Gulf tumbled on Thursday, following declines in oil prices as an uncertain demand outlook and concern over higher-for-longer interest rates by the U.S Federal Reserve dampened investor sentiment.

Oil prices - a key catalyst for the Gulf's financial markets - settled more than $5 lower on Wednesday, its biggest daily drop in over a year, as a bleaker macroeconomic outlook and fuel demand destruction came into focus following a meeting of an OPEC+ panel.

Brent crude was down 0.7% on Thursday to trade at $85.17 a barrel by 1300 GMT.

Dubai's benchmark index (.DFMGI) slumped 1.2%, the sharpest fall in over six months. The index was dragged down by losses in all sectors with real estate developer Emaar Properties (EMAR.DU) and Emaar Development (EMAARDEV.DU) dropping 1.8% and 3.9%, respectively.

The emirate's largest lender Emirates NBD (ENBD.DU) declined 2.2%.

The Qatari index (.QSI) slipped 1.2%, the steepest drop since August end, weighed down by losses in all sectors with Qatar Gas Transport (QGTS.QA) falling 2.7% and Mesaieed (MPHC.QA) sliding 3.2%.

Among the losers, index heavyweights Qatar Islamic Bank (QISB.QA) and Commercial Bank (COMB.QA) lost 2.2% and 2.1%, respectively.

Saudi Arabia's benchmark index (.TASI) was down 0.7%, extending its losses to a sixth straight session, with oil major Saudi Aramco (2222.SE) falling 1% and Atheeb Telecom (7040.SE) dropping 2.7%.

The kingdom's biggest lender by assets Saudi National Bank (1180.SE) slipped 1.1% and Riyad Bank (1010.SE) dipped 3.4%.

In Abu Dhabi, the benchmark index (.FTFADGI) retreated for a second consecutive session and ended 0.6% lower, pulled down by a 0.8% drop in conglomerate International Holding Company (IHC.AD) and 1.7% fall in Aldar Properties (ALDAR.AD).

The UAE's largest lender First Abu Dhabi Bank (FAB.AD) lost 0.3% and Abu Dhabi Islamic Bank (ADIB.AD) shed 1.3%.

U.S. yields have been rising in recent weeks as investors reprice the chance of the Fed keeping rates elevated for longer, if inflation remains above target and the economy continues to show resilience.

Monetary policy in the six-member Gulf Cooperation Council (GCC) is usually guided by Fed policy because most regional currencies are pegged to the U.S. dollar.