Stock markets in the Gulf region closed mixed on Thursday as a hawkish stance from the U.S. Federal Reserve raised recession fears, while energy markets remained volatile.

The Fed’s hawkish stance risks tipping the U.S. economy into a recession, but Fed Chair Jerome Powell said a higher cost would be paid if the central bank did not get a firmer grip on inflation.

Most Gulf states, including Saudi Arabia and the United Arab Emirates, raised key interest rates by half a percentage point on Wednesday, following the Federal Reserve’s decision to increase rates by that amount.

Monetary policy in the six-member Gulf Cooperation Council (GCC) is usually guided by Fed policy decisions because most regional currencies are pegged to the U.S. dollar.

Saudi Arabia’s benchmark index gained 0.4%, rising for a second session, led by a 5.5% jump in Retal Urban Development Co after the developer signed agreements with Roshn Real Estate to develop villas.

The Saudi index, which touched a 20-month low earlier this week, posted a weekly gain of 0.4%, its first in eight weeks.

Most Gulf markets gain on U.S. data; Fed decision in focus

Oil prices, a key catalyst for the Gulf’s financial markets, steadied after early declines as the dollar firmed, while the possibility of rate hikes stoked demand concerns.

In Abu Dhabi, the index advanced 1.1%, extending gains from the previous session when it snapped a seven-day losing streak.

The Abu Dhabi bourse extended its rebound as the Fed’s rate hike matched expectations and oil prices have maintained a stronger profile for the last few days, Abdelhadi Laabi, Chief Marketing Officer at Emporium Capital, said.

The Qatari index declined 0.9%, falling for a fourth session, hit by a 1.6% drop in Qatar Islamic Bank.

According to Laabi, apart from volatility in natural gas prices, traders were also concerned about rising interest rates and high inflation locally.

Outside the Gulf, Egypt’s blue-chip index slid 1.5%, easing from over four-year highs.

The Egyptian index, however, posted its ninth weekly gain of 2%.

======================================= SAUDI ARABIA   rose 0.4% to 10,290 ABU DHABI      up 1.1% to 10,168 DUBAI          added 0.1% to 3,315 QATAR          dropped 0.9% to 10,977 EGYPT          lost 1.5% to 15,142 BAHRAIN        closed flat at 1,854 OMAN           eased 0.2% to 4,856 KUWAIT         fell 0.6% to 8,177=======================================