Major stock markets in the Gulf rose in early trade on Thursday after US inflation data paved the way for a Federal Reserve rate cut next week, while traders awaited more economic data from the United States.

The US consumer price index rose 0.2% in August, but underlying inflation showed some stickiness, which could result in the Fed delivering a smaller 25-basis-point cut at its upcoming meeting.

Fed policymakers will likely start long-awaited rate cuts next week as they seek to reduce the chance of a recession even as stubborn underlying price pressures put them off more aggressive action.

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

Saudi Arabia’s benchmark index gained 0.7%, on course to snap sessions of losses, with Al Taiseer Group advancing 1.1%.

The pace of growth in Saudi Arabia’s non-oil sector recovered slightly in August from the previous month’s more than two-year low, a survey showed on Tuesday, supported by a pickup in new orders and jobs.

Most Gulf markets in the red on weak oil

Among other gainers, oil giant Saudi Aramco was up 0.7%. Oil - a catalyst for the Gulf’s financial markets - rose more than 1%, spurred by concerns of Hurricane Francine impacting output in the US, the world’s biggest crude producer, though worries of lower demand capped gains.

Dubai’s main share index added 0.4%, with blue-chip developer Emaar Properties rising 0.8%.

In Abu Dhabi, the index was flat.

The Qatari benchmark advanced 1.8%, buoyed by a 5.5% jump in the Gulf’s biggest lender Qatar National Bank, a day after the bank approved a share buy-back of up to 2.9 billion riyals ($795.61 million).