What’s going on here?

Gulf markets are bustling as investors anticipate a potential US rate cut, pushing regional stocks like Saudi Arabia’s Al Taiseer Group upward and triggering declines elsewhere.

What does this mean?

Saudi Arabia’s stock market saw a modest 0.2% gain, led by Al Taiseer Group’s impressive 2.3% rise, reflecting the broader 2.8% economic growth in the third quarter driven by non-oil sectors. Meanwhile, Qatar’s market slipped 0.3%, mainly due to Qatar National Bank’s 1.9% drop, though the nation’s LNG production remains robust. Egypt’s market climbed 0.7%, buoyed by Telecom Egypt’s strong showing and an expected fall in inflation to 26.4% as food prices eased. Conversely, Bahrain, Oman, and Kuwait experienced slight index dips as markets adjusted to regional shifts. The probability of a 25-basis-point rate cut from the US Federal Reserve has risen to 87%, a change likely to affect the Gulf due to currency ties to the US dollar.

Why should I care?

For markets: Gulf currencies feel the ripple.

With a high likelihood of a US rate cut, Gulf currencies – tied to the dollar – will likely adjust accordingly. This shift impacts not only regional monetary policies but also investment approaches, potentially tightening or loosening financial conditions in line with US Fed decisions.

The bigger picture: Economic growth diverges in Gulf.

Saudi Arabia’s non-oil sector growth signals potential amid a global move towards sustainable energy, contrasting with Qatar’s reliance on LNG. These dynamics highlight the diverse economic strategies within the Gulf as countries balance traditional and innovative growth paths in a shifting global monetary environment.