Dubai stocks lead Middle East markets lower as Fed rate hike bets grow

Dubai stocks led a decline in most Middle Eastern equities after the US jobless rate dropped to a level the Federal Reserve considers to be full employment, bolstering the case for an interest-rate increase and spurring a flight from riskier assets.

The DFM General Index retreated 1.1 per cent to 3,531.70 at 11.04am local time, following six weeks of losses, the longest streak in almost four years. Emaar Properties, the real estate developer weighted the most on the gauge, led the descent with a 1.9 per cent drop. Abu Dhabi’s ADX General Index gained 0.5 per cent.

Stocks across emerging markets fell last week after US labour department data showed that unemployment in the world’s largest economy fell to 5.1 per cent, the lowest since April 2008. The MSCI Emerging Markets Index slumped 3.9 per cent in the five days through September 4, its 15th decline in the 19 weeks since April. Monetary policies in the GCC, where most currencies are pegged to the US dollar, are influenced by Fed data.

“A Fed rate hike is going to add to selling pressure and volatility globally, and Middle East markets always follow,” said Hisham Khairy, the head of institutional trade at Mena Corp Financial Services, Dubai’s biggest brokerage. “The regional sell-off will continue until global volatility decreases and oil finds a bottom.”

Brent crude retreated 2.1 per cent on Friday, capping a second consecutive week of dramatic trading swings.

Abu Dhabi stocks were bolstered by Etisalat’s 5.5 per cent jump as traders exchanged almost one-and-a-half times the three-month daily average number of shares. The company will allow foreigners to trade its stock directly for the first time on September 15.

The federal Government owns 60 per cent of the company through the Emirates Investment Authority, its only sovereign wealth fund, and has no intention of reducing its stake for now, Etisalat said in June.

Qatar’s QE Index lost 1 per cent. Kuwait’s stock gauge fell 0.6 per cent and Oman’s MSM30 Index decreased 0.2 per cent.

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