Gulf Stock Markets Plummet on Recession Fears and Regional Tensions
In a dramatic turn of events, major stock markets in the Gulf took a nosedive on Monday, mirroring the downward trend in Asian shares. Investors were gripped by fears that the US could be on the brink of a recession, while escalating tensions in the region only added to the mounting worries.
The US unemployment rate surged to nearly a three-year high of 4.3 percent in July, signaling a significant slowdown in hiring. This alarming development raised concerns that the labor market was deteriorating, potentially leaving the economy vulnerable to a recession.
The starkly weak July payrolls report prompted markets to factor in a 78 percent likelihood that the Federal Reserve would not only lower rates in September, but also implement a full 50 basis points cut.
The Qatari benchmark took a hit, plummeting by 2.5 percent. Every constituent of the index found itself in negative territory, including Qatar National Bank, the Gulf’s largest lender by assets, which saw a 2.3 percent decline.
Dubai’s main share index experienced a sharp decline of 4.2 percent, dragged down by an alarming 8.9 percent drop in the blue-chip developer Emaar Properties.
Meanwhile, in Abu Dhabi, the index was down by 2.7 percent.
Oil, a key driver of the Gulf’s financial markets, continued its downward spiral in a volatile trading session. The fears of a recession in the US, the top oil consumer, overshadowed concerns about supply disruptions stemming from the escalating tensions in the Middle East, the world’s largest oil-producing region.