MUSCAT: The S&P GCC composite index rose by 7 per cent in January 2022, driven by a sustained increase in oil prices, the Kuwait Financial Centre (Markaz) stated in its Monthly Market Review report for the month.
All GCC markets gained for the month, according to the report. Saudi Arabia, Qatar and Kuwait were the biggest gainers among GCC, rising 9.0 per cent, 7.5 per cent and 4.4 per cent respectively, while the Sultanate of Oman recorded a modest loss of 0.3 per cent. Abu Dhabi, Bahrain and Dubai gained 2.5 per cent, 0.7 per cent and 0.2 per cent respectively.
Among the GCC blue chip companies, the best performer was Riyad Bank, which gained 25.5 per cent during the month, followed by Saudi National Bank, which gained 14.6 per cent. The anticipated multiple interest rate hikes are expected result in increased profit margins for banks, thereby painting a positive outlook for the GCC banking sector, the report noted.
Global equity markets had a volatile month, with major indices ending in negative territory. Though concerns surrounding the spread of the new variant eased, geo political tensions and tapering of rates by the US Federal Reserve to curb high inflation acted as headwinds. Post the FOMC meeting this month, analysts expect as much as five rate hikes in 2022.
Q4 earnings started with unsatisfactory results and outlook from JP Morgan and ended on a positive note with one of the world’s most valuable company, Apple, reporting highest revenue in the company’s history amid increase in iPhone sales. Investors looked out for management commentary on and financial impact of high inflation & supply chain bottlenecks.
The MSCI World and S&P 500 (US) indices each lost 5.3 per cent for the month. Emerging market stocks also suffered losses as foreign asset managers were on a selling spree owing to rising US yields. At a time when most major economies are looking to hike interest rates, China had lowered its benchmark rates with a view to boost economic growth, especially in its property segment. The country’s Q4 2021 GDP figures and retails sales growth for December reflected signs of weakness.
Oil continued its winning rally through January and reached multi-year highs on the back of rising geo political tensions and supply constraints against strong recovery in demand. Majority of banks and other institutions have upgraded their estimates for the oil price and currently expect it to reach $100 per barrel in the near future.
On the other hand, gold had a mixed month. Despite gold being considered as a safe bet against inflation, the strengthening of the US dollar towards the month end wiped off earlier gains in gold prices, Markaz added.
Oman Observer is now on the WhatsApp channel. Click here
