DUBAI: Saudi Arabia’s stock market closed higher on Sunday as investors turned their focus to US Federal Reserve interest rate cuts, while Egypt’s main index retreated amid rising tensions in Gaza.

US producer prices increased slightly more than expected in June amid a rise in the cost of services, but that did not change expectations that the Federal Reserve could start cutting interest rates in September.

Markets have now priced in a quarter percentage-point cut in September compared with seeing just over a 50% chance of that a month ago.

Monetary policy in the six-member Gulf Cooperation Council (GCC) is usually guided by the Fed’s decisions as most regional currencies are pegged to the US dollar.

Saudi Arabia’s benchmark index gained 0.8%, with Al Taiseer Group advancing 10%, and Al Rajhi Bank closing up 1.1%.