Most major stock markets in the Gulf fell in early trade on Tuesday on rising tensions in the Middle East, although looming US interest rate cuts limited losses.

Israel issued new evacuation orders for Deir Al-Balah in the central Gaza Strip late on Sunday, forcing more families to flee, saying forces intended to act against militant group Hamas and others operating in the area.

The escalation comes with little hope of an end in sight to the war as diplomacy by mediators, Qatar, Egypt, and the United States has so far failed to close the gap between Israel and Hamas, whose leaders traded blame over responsibility for the lack of accord.

Saudi Arabia’s benchmark index dropped 0.2%, hit by a 0.6% fall in Al Rajhi Bank and a 0.8% decrease in top lender Saudi National Bank.

In Qatar, the index lost 0.1%, a day after gaining 1.2%, with petrochemical maker Industries Qatar retreating 0.8%.

Qatar agreed on Monday to supply Kuwait with 3 million tons per annum (mtpa) of liquefied natural gas (LNG) for 15 years, the second such deal since 2020 as Kuwait imports the fuel to help meet rising demand for power generation.

The Abu Dhabi index eased 0.1%. Bucking the trend, Dubai’s main share index rose 0.3%, with blue-chip developer Emaar Properties adding 1.1%.

Most Gulf markets gain on Fed rate-cut hopes

San Francisco Federal Reserve Bank President Mary Daly on Monday said “the time is upon us” to cut borrowing costs, echoing what Fed Chair Jerome Powell told a global central banking conference last week in Jackson Hole, Wyoming, but how big that first rate cut will be will depend on the data.

Traders see a 70% chance of a 25-basis-point (bp) rate cut and about 30% probability of a bigger 50-bp reduction, according to the CME FedWatch tool.