Equity markets in Dubai and Abu Dhabi mixed on falling oil prices

Falling oil prices and expectations of high interest rates

Equity markets in Dubai and Abu Dhabi ended Friday mixed on falling oil prices, while investors are betting that interest rates will remain high for a longer period.

The minutes of the meeting of the Federal Reserve System (the US central bank), released this week, showed that most members of the interest rate committee still see strong prospects for higher inflation, which warns of further rate hikes.

According to Reuters, most Gulf Cooperation Council countries, including the UAE, peg their currencies to the dollar and generally follow Federal Reserve policies that expose the region to the direct impact of any U.S. monetary tightening.

Oil prices decline after 7 weeks of growth

Oil prices, the main engine of the Gulf economy, should end this week lower after 7 weeks of growth. Brent crude fell 0.55% to $83.68 a barrel by 1233 GMT.

The Abu Dhabi Index rose 0.2% after falling for seven straight sessions, helped by a 0.3% gain in First Abu Dhabi Bank, the country’s largest bank, and a 1.6% gain in Emirates Tele Communications Group (E&E).

Reuters reported today that the Abu Dhabi National Power Company (TAQA) said it was not in talks about any investment in India’s Adani Group’s energy activities. Taka fell 0.3%.

The Abu Dhabi index fell 0.8% this week after rising for three straight weeks.

In Dubai, the main index changed little today, but fell 0.3% over the week.

Industrials and utilities stocks were among the biggest losers in the index. Fare-collecting company Salik fell 2.6% and Emirates Central Cooling Systems Corporation (Empower) fell more than 1%.