Gulf Stock Markets Rise Amid Hopes for U.S. Fed Rate Cuts Following Weak Labor Data

This increase suggests the Federal Reserve might start cutting rates as early as September.

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On Thursday, major stock markets in the Gulf showed positive movements following soft U.S. labor market data, which boosted investor expectations of interest rate cuts later this year.

Wednesday’s data indicated signs of a weakening U.S. labor market, with unemployment claims rising to 238,000.

This increase suggests the Federal Reserve might start cutting rates as early as September.

Consequently, the probability of a September rate cut climbed to 74% from 65% before the data release, with markets anticipating 47 basis points of easing this year.

Monetary policy in the six-member Gulf Cooperation Council (GCC) typically follows the Federal Reserve’s decisions due to the regional currencies being pegged to the U.S. dollar.

Saudi Arabia’s benchmark index (.TASI) gained 0.2%, breaking a four-session losing streak.

This rise was supported by a 1.6% increase in aluminium maker Al Taiseer Group (4143.SE) and a 1.6% rise in ACWA Power Co (2082.SE). Oil giant Saudi Aramco (2222.SE) also saw a 0.5% increase amid a weaker global oil market.

According to Bloomberg News, Saudi Aramco and Abu Dhabi National Oil Company (ADNOC) are separately considering bids for Australian gas producer Santos (STO.AX), citing sources familiar with the matter.

Dubai’s main share index (.DFMGI) edged up by 0.1%, with utility firm Dubai Electricity and Water Authority (DEWAA.DU) gaining 1.2%.

Similarly, Qatar’s benchmark index (.QSI) rose by 0.2%, led by a 0.5% increase in the Gulf’s largest lender, Qatar National Bank (QNBK.QA).

Conversely, Abu Dhabi’s benchmark index (.FTFADGI) slipped by 0.2%, weighed down by a 1.4% decline in Emirates Telecommunications Group Company (EAND.AD).

The Commercial Court of Rabat has ordered Emirates Telecommunications’ subsidiary Maroc Telecom to pay 6.368 billion Moroccan dirhams ($641.7 million) to Wana Corporate for alleged anti-competitive practices.

Overall, Gulf markets reacted positively to the U.S. labor data, anticipating that the Federal Reserve’s potential rate cuts could stimulate further economic activity and market growth in the region.