Most Gulf markets drop as cenbanks toe hawkish Fed line

A trader looks on near electronic boards showing stock market data at Bahrain Bourse after Joe Biden won the U.S. presidency, in Manama, Bahrain, November 8, 2020. REUTERS/Hamad I Mohammed

  • Most Gulf cenbanks raise interest rates
  • SNB sheds about $7 bln since Credit Suisse stake deal
  • Saudi index posts third weekly loss in four weeks

Nov 3 (Reuters) - Most stock markets in the Gulf ended lower on Thursday, as the U.S. Federal Reserve signalled it was not close to a dovish pivot, prompting hawkish messages from several emerging market central banks.

Most Gulf states said on Wednesday they would increase key interest rates after the Federal Reserve raised its policy rate by three-quarters of a percentage point for a fourth straight time. read more read more

Saudi Arabia and the United Arab Emirates, the region's two largest economies, both increased rates by 75 basis points. The Saudi central bank, also known as SAMA, lifted its repo and reverse repo rates to 4.5% and 4%, respectively. The UAE raised its base rate to 3.9%, effective Thursday.

Saudi Arabia's benchmark index (<.TASI>) dropped 0.8%, hit by a 1.6% fall in Al Rajhi Bank (<1120.SE>) and a 2.1% drop in Riyad Bank (<1010.SE>).

The index fell 2.3% for the week, its third weekly fall in four.

However, Saudi National Bank (SNB) (<1180.SE>) added 0.9%, extending gains from the previous session.

On Wednesday, SNB's chairman said the bank's investment in Credit Suisse (<CSGN.S>) is tactical rather than strategic, adding that the Saudi lender expects to hold its stake in the Swiss bank for at least two years. read more

The kingdom's largest bank said last week that it would invest up to 1.5 billion Swiss francs ($1.48 billion) in scandal-ridden Credit Suisse Group for an up to 9.9% stake.

Since Oct. 27, SNB market-cap has shed 25.74 billion riyals ($6.85 billion), according Refinitiv Eikon Data.

Dubai's main share index (<.DFMGI>) fell 0.6%, with sharia-compliant lender Dubai Islamic Bank (<DISB.DU>) losing 1.4% and Emirates NBD Bank (<ENBD.DU>) declining 1.5%.

In Abu Dhabi, the index (<.FTFADGI>) finished 0.5% lower, as traders booked profit following a rally. Slide in oil prices could also pressure the market, said Fadi Reyad, chief market analyst, MENA, at CAPEX.com.

Crude Prices, a key factor for the Gulf's financial markets, slipped as an increase in U.S. interest rates pushed up the dollar and heightened fears of a global recession that would crimp fuel demand, though losses were capped by concerns over tight supply.

The Qatari index (<.QSI>) declined 1%, dragged down by banking shares, including Commercial Bank (<COMB.QA>), which fell 1.6%.

HSBC slashed the target price on the lender to 7.1 Qatari riyals from 9 riyals and downgraded its rating to "hold" from "buy".

Outside the Gulf, Egypt's blue-chip index (<.EGX30>) rose 0.2%, helped by a 1.2% gain in Commercial International Bank Egypt (<COMI.CA>).

($1 = 1.0138 Swiss francs)

($1 = 3.7575 riyals)

Reporting by Ateeq Shariff in Bengaluru; Editing by Vinay Dwivedi

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