Gulf Markets Stabilize Amid Fed Rate Hike, Geopolitical Tensions

Despite escalating geopolitical tensions, Gulf stock markets held steady on Thursday, with investors weighing the impact of the US Federal Reserve's interest-rate hike.

The Fed raised its key rate by 25 basis points on Wednesday, and most GCC central banks followed suit. The Saudi Central Bank, known as SAMA, increased its repo and reverse repo rates to 4.50% and 4.00%, respectively. The UAE's Central Bank lifted the base rate on its overnight deposit facility by 25 basis points to 3.90%, while the Central Bank of Oman raised its repo rate to 4.50%. Qatar Central Bank also increased its key rates by 25 basis points.

The Gulf currencies are mostly pegged to the US dollar, except for Kuwait's dinar, which is tied to a dollar-dominated currency basket. This means that Gulf monetary policy tends to track the Fed's moves.

Market analyst Milad Azar at XTB MENA said that strong domestic fundamentals could continue to support the markets despite geopolitical pressures.