Major stock markets in the Gulf rose in early trade on Monday after Federal Reserve Chair Jerome Powell signalled that the US central bank will most likely cut interest rate in September.

Powell on Friday endorsed an imminent start to interest rate cuts, saying further cooling in the job market would be unwelcome and expressing confidence that inflation is within reach of the Fed’s 2% target.

US personal consumption and core inflation data are due on Friday. Analysts are expecting the data to be benign enough to allow for rate cuts next month.

Fed fund futures are fully priced for a quarter-point cut at the Sept. 18 meeting, and imply a 38% chance of an outsized move of 50 basis points.

The market also has 103 basis points of easing priced in for this year and another 122 basis points in 2025.

Gulf markets gain on hopes of early US Fed rate cut

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

Saudi Arabia’s benchmark index rose 0.1%, with Saudi Telecom Company advancing 2.4%.

Dubai’s main share index gained 0.3%, with blue-chip developer Emaar Properties rising 0.4%.

In Abu Dhabi, the index added 0.2%. The Qatari benchmark advanced 0.5%, led by a 1.1% rise in the Gulf’s biggest lender Qatar National Bank.

Oil prices - a catalyst for the Gulf’s financial markets - extended gains on fears a major spillover in fighting from the Gaza conflict into the Middle East could disrupt regional oil supplies, while approaching US interest rate cuts lifted the global economic and fuel demand outlook.