Recession Fears in US Drag Arab Markets into Another Day of Losses

An investor passes in front of a screen displaying information on the Saudi stock market (Tadawul) in Riyadh. (Reuters)
An investor passes in front of a screen displaying information on the Saudi stock market (Tadawul) in Riyadh. (Reuters)
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Recession Fears in US Drag Arab Markets into Another Day of Losses

An investor passes in front of a screen displaying information on the Saudi stock market (Tadawul) in Riyadh. (Reuters)
An investor passes in front of a screen displaying information on the Saudi stock market (Tadawul) in Riyadh. (Reuters)

Fears of recession in the American economy, the decline in global markets - from stocks to oil to cryptocurrencies – led to a wave of sharp losses in Middle Eastern markets on Monday, ranging between 4.5 percent and 0.9 percent, for the second consecutive day.

The UAE markets topped the declines in the Arab region, as the Dubai Financial Market Index recorded losses of 4.5 percent, reaching 4,045.9 points, while the Abu Dhabi Securities Market Index fell by 3 percent to 8,974.69 points.

In Cairo, the EGX30 Index concluded trading on Monday with losses amounting to 2.3 percent, reaching levels of 27,840.64 points, and the Egyptian pound fell against the US dollar to 49.5 pounds, the lowest level since March 11.

The Tadawul All Share Index (TASI) decreased by 2.1 percent, or by 249.91 points, to close at the level of 11,504.46, with trades worth SAR 10 billion.

The General Market Index of the Kuwait Stock Exchange closed Monday’s trading at a decline to the level of 33.6927 points, or 2 percent, while the trading volume reached 260 million shares.

The Bahrain Stock Exchange Index suffered losses of 1 percent, reaching 1,931 points, while the Bahrain Islamic Index closed at 782.85, a decrease of 24.76 points.

The Muscat Securities Market Index closed down by 0.97 percent at 4602.25 points, a difference of 44.9 points from the last trading session, which reached 4647.20 points. The market value recorded a slight decrease of 0.3 percent.

On the other hand, the Qatar Stock Exchange index stabilized at 10,057.23 points after declining in the previous session by 0.7 percent to 10,057.13 points.



Dollar Tumbles as Investors Seek Safe Havens after US Tariffs

US Dollar banknote is seen in this illustration taken July 17, 2022. REUTERS/Dado Ruvic/Illustration/File Photo
US Dollar banknote is seen in this illustration taken July 17, 2022. REUTERS/Dado Ruvic/Illustration/File Photo
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Dollar Tumbles as Investors Seek Safe Havens after US Tariffs

US Dollar banknote is seen in this illustration taken July 17, 2022. REUTERS/Dado Ruvic/Illustration/File Photo
US Dollar banknote is seen in this illustration taken July 17, 2022. REUTERS/Dado Ruvic/Illustration/File Photo

The dollar weakened broadly on Thursday, while the euro rallied after President Donald Trump announced harsher-than-expected tariffs on US trading partners, unsettling markets as investors flocked to safe havens such as the yen and Swiss franc.

The highly anticipated tariff announcement sent shockwaves through markets, with global stocks sinking and investors scrambling to the safety of bonds as well as gold.

Trump said he would impose a 10% baseline tariff on all imports to the United States and higher duties on some of the country's biggest trading partners.

The new levies ratchet up a trade war that Trump kicked off on his return to the White House, rattling markets as fears grow that a full-blown trade war could trigger a sharp global economic slowdown and fuel inflation, Reuters reported.

The dollar index, which measures the US currency against six others, fell 1.6% to 102.03, its lowest since early October.

The euro, the largest component in the index, gained 1.5% to a six-month high of $1.1021.

Trump has already imposed tariffs on aluminium, steel and autos, and has increased duties on all goods from China.

"Eye-watering tariffs on a country-by-country basis scream 'negotiation tactic', which will keep markets on edge for the foreseeable future," said Adam Hetts, global head of multi-asset and portfolio manager at Janus Henderson Investors.

The risk-sensitive Australian dollar added 0.56% to $0.63365, while the New Zealand dollar climbed 0.9% to $0.5796.

The yen strengthened to a three-week high against the dollar and was last up 1.7% at 146.76 per dollar, while the Swiss franc touched its strongest level in five months at 0.86555 per dollar.

"Negotiations are now going to be front of mind. This is probably the other big part of why we're seeing some of these currencies outperform," said Nicholas Rees, Head Of Macro Research at Monex Europe.

"It's very difficult actually to see how other countries make concessions that would encourage the US to lift these tariffs. And I think that's a big underpriced risk."

Investors are worried that some US trading partners could retaliate with measures of their own, leading to higher prices.

EU chief Ursula von der Leyen described the tariffs as a major blow to the world economy and said the 27-member bloc was prepared to respond with countermeasures if talks with Washington failed.

Worries about a global trade war have intensified since Trump stepped into the White House in January, combining with a slew of weaker-than-expected US data to stoke recession fears and undermine the dollar.

The dollar index is down more than 5.7% this year.

"These tariffs have certainly significantly increased the risks to the downside for global growth, so on balance we think that will eventually start to become more supportive again for the dollar," said Lee Hardman, senior currency analyst at MUFG.

In Asia currencies, China's onshore yuan slid to its weakest level against the dollar since February 13. China's offshore yuan also hit a two-month low.

The Vietnamese dong slumped to a record low.

Elsewhere, the Mexican peso and Canadian dollar strengthened.

Canada and Mexico, the two largest US trading partners, already face 25% tariffs on many goods and will not face additional levies from Wednesday's announcement.