Dubai and Abu Dhabi stock markets experience a rise following interest rate reduction
UAE Markets Rise Following Central Bank's Interest Rate Cut
In a move that aligns with the U.S. Federal Reserve's rate cut, the UAE central bank lowered its interest rates by a quarter percentage point on Friday. This decision seems to have had a positive impact on the UAE's financial market, with both Abu Dhabi and Dubai's indices recording growth.
In Abu Dhabi, the benchmark index finished 0.3% higher. Notable gains were seen in Adnoc Gas, which experienced a 1.5% rise, and Emirates Telecommunications Group, which saw a 3% jump. Gulf Navigation Holding, a Dubai-based shipping and logistics company, climbed by 6.8%.
Market analyst George Vessey from XTB MENA gave a positive forecast for the market in Abu Dhabi, and Abu Dhabi's own market analyst Milad Azar suggests potential for further growth following this week's interest rate cut. However, Azar also cautions that ongoing uncertainty around oil prices at current levels remains a potential risk to the market's upward momentum.
Dubai's main index also saw an increase, boosted by gains in the real estate and industrial sector. Emaar Development, a heavyweight in Dubai's real estate sector, rose by 4.9%. Dubai developer Emaar Properties saw a 1.1% increase, following its decision to scrap plans to sell a stake in its Indian subsidiary and explore potential joint ventures with major Indian companies, including the Adani Group.
However, the current oil price decline may have overshadowed the potential impact of the U.S. rate cut on the Gulf's financial market. Brent crude was down 0.1% to $67.47 a barrel by 1142 GMT. Most currencies in Gulf economies, including the UAE, are pegged to the U.S. dollar, which may be affected by the Fed's stance.
The UAE economy is projected to grow 4.9% in 2025, up from a prior forecast of 4.4%. The UAE central bank attributes this economic growth increase to higher oil production and strong growth in the non-hydrocarbon sector.
Despite these positive signs, it is important to note that the market's direction can change rapidly, and investors should always carefully consider their investment decisions. For the latest updates on the UAE's financial market, stay tuned.
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