DUBAI: Most stock markets in the Gulf closed higher on Monday, supported by investor optimism that the US Federal Reserve will cut its interest rates further this year.
The US Commerce Department said on Friday its Personal Consumption Expenditures Price Index (PCE) rose 0.3 percent in August, versus a 0.2 percent increase in July, matching the estimate of economists polled by Reuters.
Traders are currently pricing in a 90 percent chance of a Fed rate cut in October, with an around 65 percent probability of another easing in December, according to the CME FedWatch Tool.
Monetary policy shifts in the US have a significant impact on Gulf markets, where most currencies are pegged to the dollar.
Saudi Arabia’s benchmark index gained 1.8 percent, ending two sessions of losses, led by a 3.7 percent rise in Al Rajhi Bank and a 2.2 percent increase in oil giant Saudi Aramco.
The Saudi bourse soared 5.1 percent on Wednesday, marking its largest single-day gain in more than five years, driven by broad-based strength. The gains followed a Bloomberg News report that regulators may relax the 49 percent foreign ownership cap on listed companies, a move anticipated to attract significant new foreign investment to the region’s leading equity market.
Dubai’s main share index added 0.2 percent, with sharia-compliant lender Dubai Islamic Bank rising 1.7 percent. In Abu Dhabi, the index eased 0.1 percent.
Oil prices - a catalyst for the Gulf’s financial markets - fell by nearly 2 percent as OPEC+ plans for another increase to oil output in November and the resumption of oil exports by Iraq’s Kurdistan region via Turkey raised the global supply outlook.
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