Gulf Markets React to U.S. Rate Cut Bets as Saudi Stocks Lag

Gulf markets surged as traders priced in potential U.S. interest rate cuts, but Saudi Arabia's Tadawul All Share Index bucked the trend with a 0.2% decline. Al Rajhi Bank and ACWA Power led losses, while Aramco barely clung to gains after hitting a five-year low. The divergence highlights persistent concerns about Saudi Arabia's economic momentum despite modest oil price recovery.

Qatar's index rose 0.4% as financials rallied, with Qatar Islamic Bank gaining over 1%. The MOVE mirrors last week's global risk appetite rebound following soft U.S. jobs data, which market participants interpret as giving the Fed room to ease policy. Expectations are mounting for potential cuts in October and December.

Currency pegs to the dollar make Gulf economies particularly sensitive to Fed decisions. This dynamic creates Ripple effects across regional capital markets, with energy and financial stocks serving as key sentiment indicators.