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Dubai, Abu Dhabi Stocks Kick Off US Fed Week in Green

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Shares trading in the United Arab Emirates closed higher on Monday as investors brace for the US Federal Reserve's highly anticipated interest rate decision this week.

At the close of trading, the FTSE ADX General Index added 0.057%, while the DFM General Index gained 0.595%.

The US Fed is widely expected to tighten monetary policy with a 25-basis-point rate increase, its first in three years, at its Wednesday meeting amid persistent inflation and a resilient labor market.

"Our forecast is more dovish than current market pricing, which suggests a hike is overwhelmingly likely. Expectations rose after Fed Chair Kevin Warsh's Jackson Hole address, but he's said he doesn't want to give forward guidance. Fed Governor Christopher Waller has offered much clearer guidance in recent weeks, and on balance, recent data still support his case for a hold," Oxford Economics said.

Oil prices rose above $107 per barrel mark after Saudi Arabia shut down its East-West pipeline and Iran-backed Houthis claimed attacks on a Saudi military airbase. Meanwhile, the cancellation of a planned meeting between Iran and other Gulf states also added to the upward pressure.

Closer to home and on the corporate front, Space42 (ADX:SPACE42) and Viasat agreed to establish and contribute up to $1 billion in combined equity for Equatys, a shared space and ground infrastructure platform to extend mobile coverage in areas without terrestrial networks. Space42 gained 6.53% at closing.

Islamic Arab Insurance (DFM:SALAMA), d/b/a Salama, and Ajman Bank (DFM:AJMANBANK) partnered to provide Takaful services to the latter's customers, initially focusing on home finance services. Salama ended flat, while Ajman Bank closed the session 2.06% lower.

What else is happening in Asia Markets?

Asia Markets

Tadawul Share Plunge as Saudi Arabia Shuts Down East-West Oil Pipeline

The Tadawul All Share Index plunged 1.30% in the red on Sunday as the widening Middle Eastern conflict raised concerns regarding oil supply.Saudi Arabia closed its East-West oil pipeline as a precautionary measure after an Iraq-originated drone attack. The move resulted in injuries and damage, Reuters reported."The Ministry of Foreign Affairs expresses the Kingdom of Saudi Arabia's strongest condemnation of targetting the East-West Pipeline in the Riyadh and Madinah regions by several drones launched from Iraq, which resulted in injuries and some damage that is currently being recovered," the kingdom's Ministry of Foreign Affairs said. "The Kingdom of Saudi Arabia affirms that it reserves its right to take all necessary measures to safeguard its sovereignty and security, protect its facilities, and ensure the safety of its citizens and residents."In other news, another vessel was attacked in the Strait of Hormuz as Iran and other Gulf countries are set to meet in Oman for the waterway's future operations and routes.On the corporate front, Dar Al Majdiah Real Estate (SASE:4326) shares closed 0.16% higher as it entered into an agreement with Jadwa Al Maqar Real Estate Fund to serve as a developer for the Mishraf Al Majdiah in Madinah.Meanwhile, insurers Allied Cooperative Insurance Group (SASE:8150) and Salama Cooperative Insurance (SASE:8050) received the Insurance Authority's clearance to sell their tourist and domestic workers' contract insurance products in Saudi Arabia.Allied Cooperative and Salama Cooperative closed 4.96% and 3.18% in the red, respectively.

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Asia Markets

Update: US Equity Indexes Rise After August Inflation Print Triggers Rally in Shorter-Maturity Treasury Yields, Crude Oil Slumps

(Updates with index/price moves, comments and company/geopolitical news from the first paragraph.)US equity indexes rose amid a broad-based rally after August's inflation print sparked a surge in short-term government bond yields while crude oil slid ahead of a potential meeting between the Gulf states and Iran to stem their spiralling war.The Nasdaq Composite jumped 1% to 26,333.04, the S&P 500 rose 0.9% to 7,656.98, and the Dow Jones Industrial Average climbed 1% to 52,573.29 on Friday. All but two sectors, health care and utilities, rose. Communication services, consumer discretionary and technology led the gainers.The consumer price index rose 0.4%, the fastest pace since May and above July's 0.1% increase, Bureau of Labor Statistics data showed Friday. The move matched the Bloomberg-polled consensus. Core inflation jumped to a four-month high of 0.3%, exceeding projections for an unchanged 0.2% gain. On an annual basis, headline inflation held steady at 3.4%, as expected. The annual core measure eased to 2.4% from 2.5%, also in line with projections.Today's "ambiguous CPI data doesn't conclusively show evidence of continued disinflation or a continued trend of above-target inflation going forward," Jefferies Chief US Economist Thomas Simons said in a note."The rate decision at this meeting is a very close call, and it seems that no matter what the FOMC does, there will be criticism that they are making a mistake," Simons said. "If they hike, they will have to deal with setting expectations for further rate hikes, knowing that oil prices could crash at any time if there is a resolution to the situation in Iran. If they hold, they risk losing their inflation-fighting credibility, and they will be defying a market that is pricing in odds of nearly 90% for a hike."Supercore inflation - core services excluding housing - jumped 0.5% in August, marking the largest monthly gain in four months, according to a Stifel note. Over the past 12 months, the supercore grew 3.0%, accelerating from the 2.8% gain in July and marking the fastest pace since June.Last month, Fed Chair Kevin Warsh reiterated the Fed's commitment to eventually reinstating price stability, but market participants remained skeptical of any policy tightening, the Stifel note said. "There is no doubt the Fed should raise rates, but the question remains: Will they?"Most US Treasury yields rose. The two-year shot up 7.8 basis points to 4.63%, the highest since mid-2024. The 10-year yield climbed 2.7 basis points to 4.97%, the strongest level since October 2023.A six-member bloc of Gulf states is weighing a meeting with Iran next week to discuss the future of the Strait of Hormuz, people familiar with the matter told Bloomberg. Oman is aiming to assemble foreign ministers from the Gulf Cooperation Council and Iran on Monday in Salalah, a southern Omani city, sources told the news agency.The front-month US West Texas Intermediate crude oil contract slumped 2% to $100.44 per barrel, and global benchmark North Sea Brent dropped 2.6% to $104.80 per barrel. Both crude types were off their respective session lows after Saudi Arabia's Ministry of Energy said Friday that a key crude oil pipeline had been attacked and "was shut down as a precautionary measure," according to CNN.

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Asia Markets

US Equity Indexes Fall This Week as Benchmark Treasury Yield Hits Highest in Almost Three Years, Crude Oil Blows Past $100

US equity indexes fell this week as government bond yields surged to multi-year highs and crude oil soared following a worsening Iran war.* The S&P 500 closed at 7,656.98 on Friday, versus 7,718.60 a week ago. The Nasdaq Composite stood at 26,333.04, compared with 26,506.99 a week earlier, and the Dow Jones Industrial Average ended at 52,573.29, down from 53,414.25 at the end of last week.* Energy, technology and communication services led sectors, while healthcare sat at the bottom of sector charts.* The consumer price index rose 0.4%, the fastest pace since May and above July's 0.1% gain. The move matched the Bloomberg-polled consensus. Core inflation, which excludes the more volatile food and energy components, jumped to a four-month high of 0.3%, exceeding market projections for an unchanged 0.2% growth.* Interest rate traders are now pricing in an 87% probability that the Federal Reserve will raise its target rate by 25 basis points on Wednesday, up from 72% a day ago and 48% a month ago, according to the CME FedWatch tool.* The 10-year Treasury yield traded at 4.94% late Friday, the strongest level since October 2023, as inflation concerns mounted.* Yemen's Iran-aligned Houthis reached the strategic island of Perim in the Bab el-Mandeb Strait on Friday, Reuters reported, moving to tighten their grip on a vital global shipping route. If the Houthis gain control of the Bab el-Mandeb Strait, which is on the opposite side of the Arabian Peninsula from the Strait of Hormuz, it could give Iran a critical advantage in its war with the US, reducing supplies through a second major transit corridor, the news agency said Friday.* Also, this week, President Donald Trump acknowledged that the Iran war may last until after the November mid-term elections.* Global benchmark North Sea Brent crude oil surpassed $108.0 per barrel on Thursday following attacks on several crude oil carriers.

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