Most Gulf markets in red on weak oil, Fed rate outlook | Reuters

Most Gulf markets in red on weak oil, Fed rate outlook | Reuters

Most stock markets in the Gulf closed lower on Tuesday, weighed down by sluggish oil prices and fading hopes for a December U.S. rate cut.

The Federal Reserve last week cut interest rates for the second time this year, but Chair Jerome Powell said another reduction this year was "not a foregone conclusion".

Market participants now see a 65% chance of another rate cut in December, down from over 90% prior to Powell's remarks, according to CME's FedWatch Tool.

U.S. monetary policy shifts have a significant impact on Gulf markets, where most currencies are pegged to the dollar.

Saudi Arabia's benchmark index (.TASI), opens new tab gave up early gains to end 0.7% lower, falling for a fourth consecutive session, hit by a 1.5% fall in Al Rajhi Bank (1120.SE), opens new tab and a 4.2% slide in ACWA Power Company (2082.SE), opens new tab, a day after the firm reported third-quarter profit missing analysts' expectations.

However, oil behemoth Saudi Aramco (2222.SE), opens new tab rose 0.7%. It reported a third-quarter net profit of 101.02 billion riyals ($26.94 billion), down from 103.4 billion riyals last year, and also raised its 2030 production capacity growth target for sale-ready gas to about 80% above 2021 levels, up from an earlier goal of more than 60%.

Among other gainers, Saudi Telecom Company (7010.SE), opens new tab rose 1.5%, following an increase in quarterly revenue.

According to Daniel Takieddine, co-founder and CEO of Sky Links Capital Group, most sectors were in negative territory, weighing on the general performance amid persistent negative market sentiment.

In Abu Dhabi, the index (.FTFADGI), opens new tab added 0.4%, helped by a 3.1% jump in Aldar Properties (ALDAR.AD), opens new tab.

Aldar saw a steep fall in the previous two sessions after a Bloomberg report indicated that Alpha Dhabi (ALPHADHABI.AD), opens new tab intended to divest a portion of its stake in the developer.

Dubai's main share index (.DFMGI), opens new tab eased 0.1%, hit by a 2.7% decline in top lender Emirates NBD (ENBD.DU), opens new tab.

Meanwhile, crude oil prices slipped as markets read OPEC+'s decision to pause output hikes in the first quarter of next year as a signal of oversupply in the market.

Outside the Gulf, Egypt's blue-chip index (.EGX30), opens new tab advanced 1.1%, hitting an all-time high, with Talaat Moustafa Group Holding (TMGH.CA), opens new tab jumping 4.8%.

In the previous session, the holding group climbed 4.8%, after its unit launched the development of a new integrated tourism project with an anticipated investment of $788 million.

Aramco Q3 supported by higher volumes, better downstream margins – Citi

Aramco Q3 supported by higher volumes, better downstream margins – Citi

Saudi Aramco's Q3 net income of $26 billion was broadly in-line with market expectations driven by higher volumes and refining availability in what was an improved margin environment, said Citi.

Oil and gas volumes which increased by 4% quarter-on-quarter (qoq) combined with better downstream margins and availability, Citi analyst Alastair R Syme and others said in a note.

Cash conversion remained healthy and continues to afford plenty of financial flexibility, they said.

Capex guidance is trimmed to the low end of the range of $52-55 billion from $52-58 billion) and suggests that the growth capex plan is probably peaking into next year.

“The equity has recovered from the September lows and still offers a healthy spread vs its own debt (+110 bps). The challenge, however, is a 2026 oil balance that points to price deflation from here and offers little window to add further barrels back,” the note said.

Global oil prices have declined 13% this year to about $65 a barrel, well below the $90 per barrel that the IMF has estimated Saudi Arabia requires to balance its budget.

On Sunday, OPEC+ agreed to a small oil output increase for December and a pause in production hikes in the first quarter of next year.

Citi has a target price of 25.50 riyals ($6.80) on Aramco.