Major stock markets in the Gulf rose in early Thursday trade after most central banks in the region cut their key interest rates following a larger than usual policy easing by the US Federal Reserve.

The Fed cut its benchmark rate by 50 basis points (bps) on Wednesday, with policymakers seeing another half a percentage point fall by the end of this year. Saudi Arabia’s benchmark index gained 0.4%, with Al Rajhi Bank rising 1.1%.

The kingdom, the region’s biggest economy, cut its repurchase agreement (Repo) rate and reverse repo rate by 50 bps each to 5.5% and 5.0% respectively, according to a central bank statement.

Among other gainers, oil behemoth Saudi Aramco was up 0.6%.

Oil prices - a catalyst for the Gulf’s financial markets - rose after the US rate cut, but concerns over global demand lingered and capped gains. Dubai’s main share index added 0.5%, led by a 1.2% increase in blue-chip developer Emaar Properties.

In Abu Dhabi, the index edged 0.2% higher.

The United Arab Emirates’ central bank also reduced its base rate on the overnight deposit facility by half a percentage point to 4.90%.

Major Gulf markets subdued ahead of Fed rate decision

Monetary policy in the Gulf Cooperation Council (GCC) often aligns with the Fed’s decisions as most regional currencies are pegged to the US dollar.

The Qatari benchmark added 0.4%, driven by a 0.6% rise in the Gulf’s biggest lender Qatar National Bank.

Qatar’s central bank cut key interest rates by 55 basis points on Wednesday.