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Abu Dhabi, Dubai Stocks Begin US Fed Week in Green

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Shares in the United Arab Emirates closed Monday higher as investors shift their attention to the US Federal Reserve's upcoming interest rate decision due later in the week while keeping watch of the latest regional developments in the Middle East.

At the close of trading, the FTSE ADX General Index was up 0.173%, while the DFM General Index added 0.987%.

The US Fed will announce its interest rate decision on Wednesday, with markets expecting the federal funds rate to remain unchanged amid persistent inflation, volatile oil prices, and geopolitical risks.

"Our base case is that the Fed will stay on hold at 3.5-3.75% in July. But the spike in oil prices has made it a close call. With markets now pricing nearly 10bp of hikes in July, Chair Warsh faces a difficult choice. Not hiking could challenge the Fed's credibility on inflation. But raising rates would go against his framework of looking through supply shocks," BofA Global Research said. "We think July is Warsh's call as he has enough votes either way. He has strategic incentives to hike soon. We still expect three 25bp hikes, in Sep, Oct & Dec."

Boosting investor sentiment is the temporary pause in the exchange of attacks between the US and Iran, raising hopes for renewed diplomatic talks. However, the Iran-backed Houthi forces attacked two energy facilities in Saudi Arabia in retaliation for the latter's air strikes on its military positions in Hodeidah.

Back home and on the corporate front, FAB Securities reiterated its accumulate rating on the National Bank of Ras Al-Khaimah (ADX:RAKBANK), d/b/a Rakbank, with a price target of 10 Emirati dirhams per share, citing resilient profitability growth in the second quarter backed by an increase in net funded and non-funded income. Its shares closed the session 0.66% higher.

Over in Dubai, Emirates Islamic Bank (DFM:EIB) executed a host-to-host integration of its banking platform with Taaleem Holdings' (DFM:TAALEEM) enterprise resource planning system to enhance the latter's payment processes. Taaleem shares were 0.63% in the green at the time of closing.

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