Gulf Stocks Mixed, Oil Steady as Powell Probe Rattles Fed Independence

Gulf equities and oil futures were mixed in early Monday trading as markets weighed fresh legal proceedings against Federal Reserve Chair Jerome Powell. Brent crude for March delivery was up 0.30% to trade at $63.53/bbl at 11.43 am ET, while WTI crude for February delivery was trading up 0.14% to change hands at $59.20/bbl.

Saudi Arabian Mining Co (1211.SE), was up 4.7% while Dar Al Arkan Real Estate (4300.SE) gained 3.6% after its subsidiary, Dar Global (DARD.L), announced it will launch Trump-branded luxury projects worth $10 billion. ESG Emirates Stallions Group (ESG.AD), rose 2.8% after signing development agreements with Rotana Hotels & Resorts valued at about 900 million dirhams ($245 million).

Saudi Arabia’s benchmark stock index (.TASI) and the Qatari benchmark index (.QSI) also edged higher; however, Dubai’s benchmark stock index (.DFMGI), Emaar Properties (EMAR.DU), Dubai Investments (DINV.DU), Alpha Dhabi Holding (ALPHADHABI.AD) and ADNOC Gas (ADNOCGAS.AD) all traded lower.

The U.S. attorney’s office in the District of Columbia has launched a criminal investigation into Powell over the renovation of its Washington headquarters at a cost of $2.5 billion renovation, ~$700M over the budget. The probe will examine whether Powell lied to Congress about the project’s scope, raising the specter of lawfare after Trump repeatedly attacked Powell for keeping interest rates high.

According to Powell, grand jury subpoenas served by the Department of Justice are punishment for the central bank’s refusal to bend to Trump’s demands to lower interest rates.

“This new threat is not about my testimony last June or about the renovation of the Federal Reserve buildings,” Powell said in a statement. “The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President.”

Any sustained pressure on the Federal Reserve risks feeding directly into energy markets via rates and the dollar. Rising political uncertainty around U.S. monetary policy tends to lend support to crude prices through dollar weakness, even as it weighs on equities tied to global capital flows, including Gulf markets.

By Alex Kimani for Oilprice.com

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