In its first policy meeting under new Fed chief Jerome Powell, the United States Federal Reserve raised interest rates on Wednesday. The rate hike of 25 basis points was widely expected.

The Fed has forecast at least two more hikes for 2018. Given that some investors had expected it to project three more rate hikes, the guidance was perceived by some as less hawkish than anticipated, a positive factor for risk assets in general, though analysts noted the Fed was upbeat on the economy overall.

“The guidance in terms of the future rate hikes is a touch more hawkish than originally expected. 2019 looks like we’re going to get a faster pace of rate hikes,” Matt Miskin, market strategist at John Hancock Investments told Reuters.

In stocks, Wall Street shares rose immediately after the Fed’s statement on Wednesday but ended the day lower. The S&P 500 lost 0.18 percent and the Nasdaq Composite dropped 0.26 percent.

In early trading on Thursday, MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.1 percent, erasing earlier gains of up to 0.7 pct.

In the Middle East, UAE stock markets outperformed their peers on Wednesday. News that Aldar and Emaar Properties were partnering to launch local and international projects worth 30 billion dirhams ($8.2 billion) boosted the markets.

The Abu Dhabi index rose 0.9 percent as Aldar Properties surged 2.8 percent. The index in Dubai added 0.8 percent, with Emaar rising 2.2 percent.

Saudi Arabia’s stock market rose 0.5 percent, as traders anticipate its inclusion into the secondary FTSE Russell emerging market index next week.

Al Rajhi Bank rose 1 percent, with the stock going ex-dividend on Monday. National Commercial Bank added 0.9 percent and miner Ma'aden gained 2.6 percent, while retail play Jarir rose by 3.2 percent.

Oman’s index regained some ground on Wednesday by adding 0.3 percent after a series of losses in the last couple of days.

The index was trading near nine-year lows earlier in the week. Moody’s Investors Service in the past week lowered the long-term issuer and senior unsecured bond ratings of the government of Oman to Baa3 from Baa2, with a negative outlook.

“The recent decline in the market, can be attributed to multitude of factor(s), including and not limited to: Moody’s rating action on Oman and some of the companies, exit of investment from GCC and international investors towards other markets, companies going ex-dividend and portfolio restructuring of local investors towards GCC,” Ubhar Capital said in a report.

Egypt’s blue-chip index added 0.2 percent, boosted by a 10 percent rise in real estate firm SODIC.

Mohamad Al Hajj, Head of MENA Equity Strategy at EFG Hermes told Trading Middle East by email on Tuesday: “Egypt is up 11 percent month-to-date vs 1 percent for emerging markets and 3 percent for MENA equities; however, Egypt still trades at a discount to regional peers (Egypt’s 2018 P/E is 12x vs 13x for MENA and EM). We remain positive on the Egyptian market and see more upside.”

Qatar’s index fell 1.2 percent, Kuwait’s index dropped 0.3 percent while Bahrain’s index closed 0.3 percent lower.

In commodities, oil prices were trading higher early on Thursday on ongoing tensions in the Middle East and after the Energy Information Administration (EIA) said late on Wednesday that U.S. crude inventories fell 2.6 million barrels in the week to March 16, to 428.31 million barrels.

U.S. West Texas Intermediate (WTI) crude futures were at $65.27 a barrel at 0122 GMT, up 10 cents, or 0.2 percent, from their previous close.

Brent crude futures were at $69.53 per barrel, up 6 cents, or 0.1 percent.

In currencies, the dollar dropped on Thursday after the Fed meeting and as worries mounted about a coming announcement on tariffs from U.S. President Donald Trump.

The dollar lost 0.4 percent against the yen, turning down on the week to edge closer to its 16-month low of 105.24 on March 2.

Gold prices edged higher on Thursday, adding to gains in the previous session on the back of a weaker dollar.

Spot gold rose 0.1 percent to $1,333.41 per ounce at 0030 GMT. Prices rose 1.6 percent in the previous session, the biggest one day percentage gain since May 17, 2017.

In other news, data released by customs showed on Wednesday that Algeria’s trade deficit fell to $97 million in the first two months of 2018, versus $2.33 billion in the same period last year.

For access to market moving insight, subscribe to the Trading Middle East newsletter by clicking here

Our Standards: The Thomson Reuters Trust Principles


Disclaimer: This article is provided for informational purposes only. The content does not provide tax, legal or investment advice or opinion regarding the suitability, value or profitability of any particular security, portfolio or investment strategy. Read our full disclaimer policy here. 

© ZAWYA 2018