Most stock markets in the Gulf edged higher in early trade on Thursday as investors assessed the monetary policy and inflation outlook in the world’s largest economy.

Traders responded to a US inflation print that was in line with expectations by ramping up bets on a Federal Reserve rate cut next month.

Markets are now pricing in an 83% chance of a 25 basis-point rate cut from the Fed next month, up from about 59% a day ago, according to the CME FedWatch tool.

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

Dubai’s main share index added 0.2%, with blue-chip developer Emaar Properties advancing 1.3%. Toll operator Salik gained 1.1% after reporting a higher third-quarter net profit.

In Abu Dhabi, the index rose 0.4%, with conglomerate International Holding climbing 1%. However, Lulu Retail Holdings - Middle East’s biggest hypermarket chain operator - dropped 2.5% in market debut.

Most Gulf bourses in red as focus shifts to US inflation data

The Qatari index was up 0.4%, with petrochemical maker Industries Qatar gaining 1.3%.

Saudi Arabia’s benchmark index fell 0.9%, weighed down by a 4% slide in Acwa Power Company, whereas Saudi Telecom Company (STC) retreated more than 3%.

The kingdom’s sovereign wealth fund PIF has raised 3.86 billion riyals ($1.03 billion) from selling a 2% stake in telecoms firm STC, PIF said on Thursday, as it seeks to raise funds for the Gulf country’s economic diversification programme.