The main Saudi market (TASI) opened trading on Tuesday with an increase of 0.45 percent, with “Saudi Aramco” shares remaining stable at 26.10 riyals, following the company’s announcement that its adjusted net profit increased by 9 percent on an annual basis to 117 billion riyals ($31.2 billion) in the third quarter.
The market opened on the rise, after the Monday session ended with a gain of 0.5 percent, with the index closing at 9,883 points, adding 45 points, after declining during the sessions on Thursday and Sunday.
“Al Majid Oud” shares topped the list of stocks with the highest increase at the beginning of trading, rising by 8 percent to 121.20 riyals.
On the other hand, indices of the energy and banking sectors declined slightly at the beginning of trading.
Goldman Sachs raised its forecast for natural gas prices in Europe during the year 2027, in light of the continued uncertainty regarding market prospects, amid risks related to liquefied natural gas supplies from the Middle East and the possibility of temperatures falling below their usual levels during the winter.
The bank raised its forecast for the price of European gas in the first quarter of 2027, according to the Dutch TTF index, to 74 euros per megawatt-hour, compared to 44 euros in its previous estimates. He also increased his expectations for the average price during the entire year to 51 euros per megawatt-hour, compared to 32 euros previously, according to Reuters.
Goldman Sachs estimated that the markets are taking into account a 47 percent possibility of a continued decline in liquefied natural gas supplies from the Middle East during the current winter, coinciding with recording temperatures below seasonal averages.
The bank said in a note issued on Monday that some of the risks that may push prices to rise have already been calculated in the markets, but the recent decline in liquefied natural gas flows through the Strait of Hormuz reinforces the need for hedging in anticipation of scarcity of supplies during the European winter.
He added that the deviation of temperatures in northwestern Europe from their seasonal average may lead to a change in the regional demand for gas, equivalent to 12 percent of the available storage capacity.
Although LNG supplies from the Middle East exceeded expectations in October, gas tanker traffic remains volatile, while estimated flows of LNG through the Strait of Hormuz have not recovered at the same pace as oil flows.
In an indication of the continuing security risks in the region, data monitoring maritime security incidents showed that October was the month with the most recorded attacks on commercial ships in the Strait of Hormuz and adjacent waterways.
On the other hand, the standard Dutch gas contracts for delivery next month at the TTF Center fell by more than 10 percent, on Monday, to reach 10.77 euros per megawatt-hour, amid growing hopes for an end to the US-Israeli war, driven by the continuation of mediation talks, despite the continuing attacks on ships in the region.
The Central Bank of Australia raised interest rates on Tuesday, to their highest levels in 18 years, the fifth increase since the beginning of the year, but the division of board members regarding the decision, by six votes to three, strengthened expectations that the end of the monetary tightening cycle was approaching.
At the conclusion of its November meeting, the bank raised the key interest rate by 25 basis points to 4.85 percent, stressing that it would continue to take the measures it deems necessary to return inflation to its target levels. But he omitted from his statement an explicit reference to the possibility of further increases in interest rates if necessary, according to Reuters.
This less stringent shift in the bank's tone was quickly reflected in the markets, as the Australian dollar fell, while investors' bets on keeping interest rates unchanged at next month's meeting strengthened. The Australian dollar fell 0.3 percent to $0.6979, while three-year government bond futures fell four points to 95.13 points.
30 out of 32 economists polled by Reuters had expected to raise interest rates, while the markets were pricing in an 88 percent probability of taking this step, following the release of data showing a sharp rise in inflation during the third quarter, in addition to tough statements from bank officials, which overshadowed fears of the unemployment rate rising to its highest levels in five years.
The bank’s board of directors said in a statement, “The revised inflation expectations and the continued risks that push it to rise led the board to consider that additional tightening of financial conditions has become necessary to support the return of inflation to its targeted levels.”
He added that the Council “will continue to take what it deems necessary to return inflation sustainably to the target level.”
The total increases approved by the bank since the beginning of the year amounted to 125 basis points, which fully offset the increase in monetary easing of 75 basis points during 2025, and placed Australia among the most stringent central banks in advanced economies. On the other hand, the US Federal Reserve kept interest rates unchanged during its meeting this month, while the Reserve Bank of New Zealand surprised the markets with its decision to stop raising interest rates, in a close vote.
Catherine Palmer, head of fixed income strategy at BlackRock Australia, said that the challenge facing the central bank is continued inflationary pressures, coinciding with the beginning of a slowdown in economic growth momentum.
She added: “As the full impact of the interest rate increases approved this year on the economy continues to emerge, we expect the bank to keep interest rates at their current levels during the coming period, pending evaluation of the new economic data and the extent to which the impact of monetary policy has been transmitted to the economy, while retaining the option of tightening again if inflationary pressures do not decline.”
For his part, Stephen Smith, a partner at Deloitte Access Economics, said that the vote split of six votes to three reflects the budget difficulty facing monetary policy makers, at a time when families are reducing their spending and companies are facing weak demand.
He added, "The increase approved today enhances the risks of economic growth slowing at a pace exceeding expectations over the next year, at a time when inflation is still high."
In a separate update to its economic forecasts, the bank raised its inflation estimates significantly, expecting it to remain at high levels for a longer period, even assuming interest rates remain near their current levels for a year or more.
These forecasts indicate that the economy may enter into a prolonged period of weak growth and continued price pressures. Smith said that this scenario poses a challenge to families that have already begun reducing their spending, and to companies facing declining sales, adding that this may explain the division of board members over the decision to raise interest.
Fears of entrenched inflation
The Australian monetary authorities are concerned that the continued rise in oil prices will lead to the transfer of inflationary pressures to broader sectors of the economy, which may destabilize inflation expectations. Core inflation accelerated to its highest level in two years, recording 3.7 percent during the third quarter, after remaining for more than five years above the central bank’s target range, set between 2 and 3 percent.
The housing sector was most affected by the tightening of monetary policy, as the market is heading towards recording its largest decline in four decades. It is expected that this decline will lead to a reduction in household spending as a result of the decline in the value of their wealth, in addition to its repercussions extending to sectors related to real estate market activity, from real estate brokerage companies and property transfer offices to furniture moving companies.
The labor market also showed signs of slowing, with the unemployment rate rising to 4.7 percent, its highest level in five years. However, the Central Bank still believes that the labor market is experiencing some degree of tightness, and that it continues to be a source of inflationary pressures.
The Australian economy slowed under the weight of rising borrowing costs, but this slowdown was not enough to allay concerns about inflation, in light of the continued boom in investments in data centers, which boosts demand in an economy suffering from limited supply.
