Middle East stock markets fall on U.S. recession fears, regional tensions
(MENAFN) Middle Eastern stock markets experienced a downturn on Monday, with Dubai's index facing the most significant losses, driven by concerns over a potential U.S. recession and escalating regional conflicts. The unemployment rate in the U.S. surged to a three-year high of 4.3 percent in July, coupled with a sharp deceleration in hiring, which has heightened worries about a weakening labor market and an Economy that could be prone to recession. Dubai's index fell by 4.5 percent, marking its largest daily drop since May 2022, primarily due to a 7.6 percent decline in Emaar Properties shares.
The broader financial markets are also bracing for potential impacts from the Federal Reserve's decision-making regarding interest rates, according to Bas Kooiman, CEO and asset manager at DHF Capital. He noted that any delays in rate cuts could have extensive economic repercussions, potentially affecting Gulf Cooperation Council (GCC) economies. In Abu Dhabi, the index closed down by 3.4 percent, significantly impacted by a 7.3 percent drop in shares of First Abu Dhabi Bank, the UAE's largest financial institution. Additionally, a recent survey revealed that the UAE's non-oil private sector experienced its slowest growth in nearly three years in July, with a notable deceleration in output and new orders.
Saudi Arabia's stock market also ended the day lower, closing down 2.1 percent—its lowest level since mid-December. This decline was driven by a 6.1 percent drop in Al-Taiseer Group shares and a 5.2 percent decrease in National Commercial Bank shares, despite the bank reporting an increase in quarterly profits. The overall sentiment across the region reflects growing apprehensions about the broader economic impact of potential U.S. recessionary pressures and the ongoing geopolitical uncertainties.
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