DUBAI: Gulf stock markets closed higher on Tuesday on expectations of economic recovery in the world’s second largest economy, China, and smaller interest rate hikes from the US Federal Reserve.

The Fed will end its tightening cycle after a 25-basis-point hike at each of its next two policy meetings and then likely hold interest rates steady for at least the rest of the year, according to most economists in a Reuters poll.

Most Gulf currencies are pegged to the US dollar, while Saudi Arabia, the United Arab Emirates and Qatar usually mirror US monetary policy changes.

The International Energy Agency (IEA) said on Wednesday that China’s lifting of COVID-19 restrictions should bring global demand to a record high this year. OPEC also forecast a rebound in Chinese demand.

The benchmark index in Saudi Arabia added 0.3%, lifted by gains in materials, financial and energy sector stocks, with oil giant Saudi Aramco continuing its gains since Monday, rising 0.6%. The world’s largest Islamic bank by market capitalization, Al Rajhi Bank, rose 0.8%.

In Abu Dhabi, the index rose 0.6%, ending its four session losing streak, with the country’s biggest lender First Abu Dhabi Bank surging 2.7% and real estate developer Aldar Properties rising 1.3%.