Major stock markets in the Gulf rose in early trade on Monday amid expectations of a US interest rate cut this week, with the Saudi index on course to gain for a third session.

The Fed’s two-day monetary policy meeting beginning on Tuesday will take centre stage for the week.

Expectations are for the central bank to kick-start an easing cycle, providing room for regional central banks to consider cutting rates.

Markets are pricing in a 59% chance of a 50 basis points (bps) cut, with a 41% probability of a 25 bps cut, CME FedWatch tool showed.

Monetary policy in the Gulf Cooperation Council (GCC), which includes the UAE, often aligns with the US Federal Reserve’s decisions as most of the regional currencies are pegged to the US dollar.

Saudi Arabia’s benchmark index gained 0.2%, with Saudi Arabian Mining Company (Ma’aden) advancing 2%.

US aluminium maker Alcoa said on Sunday that it would sell a 25.1% stake in its Ma’aden joint venture to Ma’aden for $1.1 billion.

The transaction includes approximately 86 million shares of Ma’aden and $150 million in cash, Alcoa said in a statement, adding that it expects to close the deal in the first half of 2025.

Elsewhere, oil giant Saudi Aramco was up 0.4%.

Oil prices - a catalyst for the Gulf’s financial markets - rose in Asian trade on Fed rate cut outlook, though gains were capped by persistent demand worries and weaker China data.

UAE stocks gain on Fed rate cut hopes

Dubai’s main share index added 0.4%, led by a 1.1% jump in sharia-compliant lender Dubai Islamic Bank. In Abu Dhabi, the index was up 0.5%.

The Qatari benchmark edged 0.1% higher, helped by a 0.4% rise in the Gulf’s biggest lender Qatar National Bank.