Most Gulf markets in red as US recession fears dent appetite

Most major stock markets in the Gulf dropped in early trade on Thursday as weak US consumer data sparked recession worries worldwide, although the Qatari index edged higher to snap a seven-day losing streak.

US retail sales fell in December by the most in a year, pulled down by lower purchases of motor vehicles and a range of other goods, putting consumer spending and the overall economy on a weaker growth path heading into 2023.

The widespread signs of weakening demand and subsiding inflation are likely to encourage the U.S. Federal Reserve to further scale back the pace of its rate hikes next month, but not pause its monetary policy tightening anytime soon as the labor market remains tight, reported Reuters.

Most Gulf currencies are pegged to the dollar and Qatar, Saudi Arabia and the United Arab Emirates usually mirror any monetary policy change in the US.

Saudi Arabia’s benchmark index (.TASI) dropped 0.3%, hit by a 1% fall in Retal Urban Development Co (4322.SE), while Saudi Kayan Petrochemical Company (2350.SE) retreated 2.8% a day after it announced shutdown of some production units for periodic maintenance.

Oil futures - a key catalyst for the Gulf’s financial markets - fell by nearly $1, extending losses from the previous day, as a surprise jump in U.S. crude stocks weighed on the market along with fears of a recession that were heightened by disappointing U.S. retail sales and output data.

Dubai’s main share index (.DFMGI) eased 0.2%, hit by a 0.7% fall in Salik Company (SALIK.DU), operator of the emirate’s exclusive road toll system.