Mideast Stocks: Most Stock Markets Gain on US Rate Cut Hopes

Most stock markets in the Gulf closed higher on Monday, supported by investor optimism that the U.S. Federal Reserve will cut its interest rates further this year. The U.S. Commerce Department said on Friday its Personal Consumption Expenditures Price Index (PCE) rose 0.3% in August, versus a 0.2% increase in July, matching the estimate of economists polled by Reuters.

Traders are currently pricing in a 90% chance of a Fed rate cut in October, with an around 65% probability of another easing in December, according to the CME FedWatch Tool. Monetary policy shifts in the U.S. have a significant impact on Gulf markets, where most currencies are pegged to the dollar.

Saudi Arabia's benchmark index gained 1.8%, ending two sessions of losses, led by a 3.7% rise in Al Rajhi Bank and a 2.2% increase in oil giant Saudi Aramco. The Saudi bourse soared 5.1% 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% 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%, with sharia-compliant lender Dubai Islamic Bank rising 1.7%. In Abu Dhabi, the index eased 0.1%.

Oil prices - a catalyst for the Gulf's financial markets - fell by nearly 2% 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. The Qatari index was 0.2%, supported by a 3.6% gain in telecom firm Ooredoo.

Outside the Gulf, Egypt's blue-chip index finished 0.6% higher, with Emaar Misr For Development jumping 5.9%.

Saudi Arabia rose 1.8% to 11,434

Dubai added 0.2% to 5,869

Abu Dhabi fell 0.1% to 9,991

Qatar gained 0.2% to 11,012

Egypt up 0.6% to 36,391

Bahrain added n 0.1% to 1,852

Oman rose 0.7% to 5,193

Kuwait was up 0.6% to 9,389