Markaz: Kuwait Equities remain resilient despite ongoing trade disruptions and a global rate hike wave

(MENAFN- MENAFNEditorial) Kuwait, 04 October 2026: Kuwait Financial Center “Markaz” noted in its October 2026 Monthly Market Review that Kuwait’s equity market remained resilient, registering a milder decline than its regional peers during September. Global and regional investor sentiment weakened, weighed down by the Fed’s first rate hike in over three years, surging global bond yields and the Central Bank rate hikes, amid stalled U.S.–Iran peace efforts and continued closure of the Strait of Hormuz. Kuwait’s All-Share Price Index declined 1.3% in September, with the Main market Index declining 1.5% and the Premier Market Index falling 1.3%. From a sectoral perspective, Insurance and Healthcare were the only sectors to post positive returns, gaining 11.0% and 4.5%, respectively during the month. International Financial Advisors Holding was the top-performing Premier Market stock in September, surging 36.7% after change in ownership stakes, which saw Arzan Financial Group increasing its shareholding in the company. Kuwait Real Estate Company followed with a 3.7% gain, benefiting from the continued recovery in Kuwait’s real estate sector, with property sales increasing for a third consecutive month in August.
Kuwait’s non-oil private sector grew for a second straight month in August, with the S&P Global Kuwait PMI rising to 53.6 from 50.8 in July, its highest level since February, driven by robust gains in output and new orders. Domestic credit increased 0.9% m/m in August (+5.1% y/y), supported by a rebound in lending to banks and financial institutions, alongside continued growth in household (+0.7% m/m, +4.7% y/y) and business credit (+0.4% m/m, +6.6% y/y), while resident deposits rose 0.7% m/m (+8.4% y/y). The Central Bank of Kuwait maintained its discount rate at 3.50%, diverging from most GCC peers due to the flexibility provided by the dinar’s basket peg. On the fiscal front, Kuwait enacted a sovereign sukuk law allowing Islamic debt instruments to form part of its government financing framework, which is expected to broaden access to sharia-compliant funding and accelerate debt market development.
GCC equity markets declined in September, with the S&P GCC Composite Index down 3.7%, as investor sentiment was weighed down by a less supportive interest rate environment and heightened geopolitical tensions. The Federal Reserve’s first rate hike since 2023 prompted most GCC central banks, including Saudi Arabia, the UAE, Qatar, Oman and Bahrain, to raise rates by 25 bps, reinforcing the region’s sensitivity to U.S. monetary policy and increasing borrowing costs. Saudi Arabia’s Tadawul Index fell 6.2%, weighed down by geopolitical concerns, with blue-chip stocks such as Ma’aden and SNB declining 8.2% and 8.0%, respectively. In contrast, UAE markets outperformed, supported by strong non-oil sector activity. Dubai’s index gained 2.1%, led by Emaar Properties (+7.2%) and Emirates NBD (+3.1%), with the latter also reviving efforts to acquire India’s IDBI Bank. Abu Dhabi equities rose 0.6%, supported by banking stocks including ADCB (+10.7%) and FAB (+0.2%). Meanwhile, the Abu Dhabi Securities Exchange (ADX) joined the SWIFT network, enhancing post-trade connectivity and improving international investor access to the UAE capital market.
Across the GCC, non-oil PMIs strengthened in Saudi Arabia (53.8 in August, from 53.1 in July, a six-month high) and the UAE (55.3 in August, from 52.7 in July, the strongest reading since December 2024), supported by improving demand, project activity and sentiment. In Saudi Arabia, revised data from GASTAT showed real GDP contracting 4.7% y/y in Q2 2026, its first annual decline in two and a half years, as a 24.8% drop in oil activity outweighed modest non-oil growth of 0.9% y/y. Saudi Arabia also returned to international debt markets during the month with a USD 3.25 billion sukuk issuance that drew over USD 16.5 billion in orders. Qatar posted its largest quarterly fiscal deficit in a decade in Q2 2026 as LNG exports declined. However, Fitch affirmed Qatar’s AA rating and removed it from Rating Watch Negative while maintaining a Negative Outlook during the month.
Global and U.S. equity markets weakened in September, with the S&P 500 declining 0.5%, the MSCI World Index falling 1.3%. Markets were pressured by stronger-than-expected August payrolls data and a firmer inflation print, before the Fed raised rates by 25 bps to 3.75%-4.00% during September and signaled a continued tightening bias through its hawkish dot plot, reinforcing expectations of another rate hike in October. Fed Chair Kevin Warsh described the move as withdrawing “a dose of accommodation.” Equities later found support from continued AI-related optimism, particularly around new consumer AI offerings from companies such as Meta. However, rising bond yields and U.S. President Trump’s rejection of Iran’s proposal to reopen the Strait of Hormuz weighed on sentiment toward the month's end. The ECB increased its deposit rate by 25 bps to 2.50%, the Bank of Japan raised rates to 1.25%, its highest level since 1995, and the Bank of England held rates at 3.75%. Emerging market equities also weakened, with the MSCI Emerging Markets Index falling 0.8%, led by a 4.8% decline in Chinese equities (MSCI China) in September 2026.
U.S. Treasury yields rose sharply in September as a hawkish Fed, higher energy-driven inflation risks, and persistent government debt issuance triggered a broad bond sell-off. The 10-year yield rose 56 bps to 5.29%, while the 30-year yield increased 42 bps to 5.64%. The 10-year yield reached its highest level since 2007, and the 30-year yield touched levels last seen more than two decades ago. The move was reinforced by the Fed’s updated projections and Chair Warsh’s view that financial conditions remain insufficiently restrictive, prompting markets to price in a more extended tightening cycle, with nearly 100 bps of cumulative policy tightening expected over the next year.
Brent crude oil prices rose 14.4% in September to USD 103.5/bbl., remaining above USD 100/bbl. for much of the month as escalating risks to supply kept prices high. Drone strikes on Saudi Arabia’s East-West pipeline and Houthi advances near Bab el-Mandeb boosted prices early in the month, while the postponement of GCC-Iran talks and President Trump’s rejection of Iran’s conditional proposal to reopen the Strait of Hormuz reduced prospects for near-term de-escalation. Meanwhile, Gold prices fell 6.6% during the month to USD 4,156.0/oz, reaching their lowest level since early August, as higher real yields and a stronger U.S. dollar reduced the appeal of non-yielding assets.
Global investors will focus on U.S. inflation, labour market data, and the October FOMC meeting for signals on the Fed’s tightening path, while bond market volatility signals remain a key driver of equity valuations. Global equities will also be guided by the Q3 2026 earnings season, testing whether AI-driven demand and tech strength can offset the impact of higher interest rates. In the GCC, markets will be shaped by oil prices, U.S.-Iran negotiations, and prospects for trade resumption through the Strait of Hormuz, which will continue to influence investor sentiment

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