Gulf Arab markets surge after U.S. Fed interest rate hike

Following the US Federal Reserve's first interest rate hike Wednesday in seven years, stock exchanges from Dubai to Riyadh on Thursday followed their peers in America and East Asia in posting gains.

On Wednesday, U.S. Fed Chair Janet Yellen announced the decision to raise interest rates by a quarter-point to a range of 0.25 to 0.5 percent, the first increase in nearly a decade.

The news of the long expected rise in the world's biggest economy was taken with relief in markets of the six Gulf Co-operation Council (GCC) member states, which are the United Arab Emirates (UAE), Qatar, Kuwait, Saudi Arabia, Bahrain and Oman.

In the UAE, the biggest stock market DFM in Dubai gained 2.92 percent to reach 3,073, marking a 10-day high.

Financial shares were demanded in particular after the U. S. rate hike ended month-long uncertainty about when the Fed would kiss good-bye to its cheap money policy.

Dubai Islamic Bank gained 4.64 percent and Ajmanbank advanced by 7.32 percent, while real estate mortgage provider Amlak jumped nine percent on heavy trading.

Dubai's sister market ADX in Abu Dhabi surged 2.05 percent to hit 4,148.29, representing a 10-day high, too.

Earlier this week, U. S. economist Nouriel Roubini from New York said at the 8th Arab Strategy Forum in Dubai that the UAE, as the most diversified economy where oil contributes 29 percent to the GDP, is much better prepared to mitigate the 2016 losses from falling oil revenues, due to the oil price slump than, for example, Kuwait and Saudi Arabia.

GCC currencies, with the exception of Kuwait, are all pegged to the greenback in a fixed currency regime, thus GCC central banks have to follow the Fed's rate increase on foot.

In Doha, the Qatar Exchange 20 Index closed 0.52 percent higher at 9,912.92 points. The Kuwaiti stock market index KSEMI failed to follow the pack and ended even at 5,623.69.

The Riyadh-based Saudi Stock Exchange, the biggest in the region in relation to market capitalization, jumped 2.61 percent to close at 7,045.68 points amid a bullish advance-decline ratio of 151 rising shares against 14 stocks which declined in value. Market bellwether SABIC, the biggest producer of petrochemical products in the world, advanced by 4.78 percent.

On Saudi Arabia, the biggest GCC oil supplier, Roubini said the kingdom shall stop regarding the oil slump as temporary, and the government shall increase efforts to diversify its economy, cancel subsidies and decrease the share of its public work force to strengthen the private sector.

For 2016, Roubini said the price of oil (Brent) will recover, "but it will not rise higher than around 50 dollars per barrel."

Brant traded on Thursday slightly higher above 37 dollars per barrel, but well below the 2015 high of 69.63 dollars per barrel. Endit