Gulf Stock Markets Plunge Following China’s Unexpected Interest Rate Cut

In a surprising move, China’s central bank cut interest rates on Tuesday, sending Gulf stock markets tumbling. Investors fear that the Chinese move will not be sufficient to reignite the country’s struggling economy.

The drop in Gulf stock prices is correlated with lower oil prices, which drive the region’s economic dynamics. Traders also fear the Chinese oil demand will not rebound.

Saudi Arabia’s primary index, the TASI, witnessed a 0.7% drop on Tuesday, extending losses from the prior session. Market heavyweights like Saudi Aramco and Saudi Awwal Bank contributed to the decline with losses of 0.6% and 2.2% respectively.

Dubai’s main share index, the DFMGI, saw a 0.2% decrease, primarily attributed to a significant 5.8% dip in shares of the Mashreq Bank.

Similarly, Abu Dhabi’s FTFADGI index registered a 0.4% fall.

The QSI index experienced a 0.3% loss in Qatar, with several index components, including Industries Qatar, a major petrochemical producer, experiencing a substantial decline.

China’s move to reduce interest rates has once again placed the world’s second-largest economy on a different economic trajectory than the US and Europe, which have raised interest rates to combat inflation.