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Gulf markets tepid as earnings fall short, Fed warns about rates

Major Gulf equities started the day mostly flat or lower, weighed down by a lackluster corporate earnings report and a cautious U.S. Federal Reserve position on monetary ease, following its decision to hold interest rates at their current level and give no indication as to when borrowing costs may be reduced.

Investor sentiment in Gulf markets was clouded by the prospect that U.S. interest rates would remain higher for a longer period of time. This is because the monetary policies tend to follow those of Fed due to currency pegs.

Saudi Arabia's benchmark stock index fell 0.4% as broad sectoral declines weighed on sentiment.

Yamama Cement shares fell by more than 1% following its disappointing second-quarter results, while Nayifat Finance shares dropped 2.4% after a 60% drop in Q2 profits compared to the same period last year.

National Gas and Industrialization Co and Saudi Telecom both lost 1.6% when their shares started trading ex-dividend.

The General Authority for Statistics released flash estimates that showed Saudi Arabia’s real GDP grew 3.9% from a year ago to the second quarter, largely due to growth in non-oil sectors as the country continues its efforts at diversifying its economy.

Dubai's main stock index fell 0.5% from its previous high of nearly two decades. This was mainly due to a 3% drop in Mashreqbank, which had posted a 17% decline in earnings for the second quarter.

Tecom Group fell 1.5% before the release of its earnings for the quarter later that day.

Investors resisted placing larger bets before key earnings announcements, and the Abu Dhabi index and Qatar's benchmark were also little changed.

Ooredoo, the Qatari telecoms company, outperformed its peers by 1.6% following its positive second quarter results. It also held steady with its guidance for the full year. (Reporting from Amna Mariyam, Bengaluru. Editing by Andrew Heavens.)

(source: Reuters)