Most stock markets in the Gulf ended lower on Monday as investors exercised caution ahead of key U.S. inflation data later in the week that could provide clarity on the size of the Federal Reserve’s likely interest rate cut this month.

Investors analysed last week’s mixed U.S. jobs data and comments from Fed officials, which suggested a weak labour market but without sufficient justification for a 50-basis point interest rate cut.

The U.S. inflation report on Wednesday will be a key indicator that could shift market expectations for the outcome of the Fed’s Sept. 17-18 meeting.

Investors wondered whether the mixed U.S. August payrolls report would be enough to tip the Fed into cutting rates by an outsized 50 bps when it meets next week.

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

Saudi Arabia’s benchmark index dropped 0.2%, with Al Taiseer Group losing 0.5%, and Riyad Bank retreating 2.1%.

Dubai’s main share index decreased 0.3%, hit by a 2.4% decline in blue-chip developer Emaar Properties.

Most Gulf markets in red on mixed US job report

In Abu Dhabi, the index declined 1%, weighed down by a 2.2% slide in Emirates Telecommunications Group.

The Qatari benchmark closed 0.4% lower, with the Gulf’s biggest lender Qatar National Bank falling 0.6%.

Outside the Gulf, Egypt’s blue-chip index added 0.3%, helped by a 7.9% jump in Egypt Kuwait Holding as the firm signed market maker agreement with National Investment Co.

Egypt’s inflation is forecast to have declined for a sixth month in August, helped by a favourable base effect, but some analysts say it is likely to have increased month on month after a series of government-led price hikes.

------------------------------------- SAUDI ARABIA    lost 0.2% to 11,963 ABU DHABI       dropped 1% to 9,355 DUBAI           down 0.3% to 4,359 QATAR           fell 0.4% to 10,216 EGYPT           rose 0.3% to 30,375 BAHRAIN         eased 0.6% to 1,938 OMAN            lost 0.6% to 4,745 KUWAIT          was flat at 7,789-------------------------------------