Mideast Stocks: Major Gulf Bourses in Red Awaiting Fed Decision, Iran Talks

Major Gulf stock markets drifted lower in early Tuesday trading as investors awaited the U.S. Federal Reserve's policy decision and developments in the Iran conflict, though ongoing corporate earnings provided some support.

Most Gulf Cooperation Council countries, including the UAE, have their currencies pegged to the U.S. dollar and follow the Fed's policy moves closely, exposing the region to the direct impact of monetary tightening in the world's largest economy.

The Fed concludes its two-day meeting on Wednesday. CME FedWatch shows a 62% probability that policymakers will keep rates unchanged, while 38% expect at least a 25-basis-point increase, up from 16% a week ago.

Markets are also pricing in an 81% chance of a rate hike at the September meeting. President Donald Trump on Monday urged the Fed to cut rates, arguing that the United States should have the world's lowest borrowing costs.

Saudi Arabia's benchmark index dropped 0.4%, dragged down by a 0.6% fall in oil major Saudi Aramco and a 1.2% decrease in Saudi Arabian Mining Co . Yemen's Iran-aligned Houthi movement said on Monday it had targeted several sensitive crude oil supply and transportation facilities connecting eastern Saudi Arabia to Yanbu, a key Red Sea oil export hub.

However, Zain Saudi Arabia advanced 1.4%, after reporting a more than 60% rise in second-quarter profit.

Dubai's main share index shed 0.5%, weighed by a 1.5% slide in sharia-compliant lender Dubai Islamic Bank .

In Abu Dhabi, the index eased 0.1%, with Alpha Dhabi Holding losing 0.8%.

Elsewhere, Fertiglobe gained more than 1%, after the fertilizer giant reported a steep rise in quarterly profit.

The Qatari index was down 0.1%.

Meanwhile, Trump said Washington was holding "good talks" with Iran and that a deal to end the conflict was possible, while warning that U.S. strikes would resume if negotiations failed. Iran indicated it would retaliate against any further attacks.