Most Gulf bourses end higher as investors weigh Fed rate hike

Most Gulf bourses closed higher on Thursday despite mounting geopolitical friction, as investors weighed the U.S. Federal Reserve’s first interest rate hike in more than three years.

Most Gulf Cooperation Council central banks raised their benchmark rates after the US Fed’s quarter-point increase on Wednesday. Regional currencies are pegged to the dollar, except for the Kuwaiti dinar, which is tied to a basket that includes the dollar, so Gulf monetary policy routinely mirrors the Fed.

Saudi Arabia raised its repo and reverse repo rates by 25 basis points to 4.50% and 4.00%, respectively. The United Arab Emirates raised its overnight deposit facility base rate by 25 bps to 3.9%, while Oman raised its repo rate by the same margin to 4.5%. Qatar’s central bank also raised key rates by 25 bps.

Low shipping traffic through the Strait of Hormuz continued to weigh on sentiment, while attention remains fixed on U.S. President Donald Trump’s planned meeting with Gulf leaders next week. Still, strong local fundamentals could continue to underpin markets, said Milad Azar Market analyst at XTB MENA.

Bets that the Fed is finally curbing inflation with its first rate increase in over three years helped soothe a global bond rout and cap soaring yields.

Saudi Arabia’s benchmark index gave up early gains to finish flat; the country’s biggest lender by assets Saudi National Bank fell 1.3% and oil major Saudi Aramco fell 0.5%.

Dubai’s main share index added 0.3%, with blue-chip devrloper Emaar Properties gaining 0.5%.

In Abu Dhabi, the index was up 0.5%, while the Qatari benchmark was up 0.2%..

Meanwhile, cross-border warfare flared as Saudi airstrikes struck Yemen, countered by Iran-backed Houthi drone and missile salvos targeting Saudi cities, while US President Donald Trump voiced hope for an imminent end to the seven-month conflict.

The hostilities have directly threatened critical energy infrastructure. Recent drone strikes damaged two pumping stations along Saudi Aramco’s 1,200-km East-West Pipeline, a vital conduit bypassing the vulnerable Strait of Hormuz.

One person was killed and two others injured in a drone interception in Saudi Arabia’s southwest governorate of Taif, Saudi state TV said on Thursday.

On Wednesday evening, U.S. President Donald Trump said he hoped the conflict, now in its seventh month, would end soon.

Outside the Gulf, Egypt’s blue-chip index advanced 1.2%, led by a 0.6% rise in Commercial International Bank.