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Gulf stock markets caught a wave of gains this week, closely tracking global rallies after encouraging US inflation data reignited hopes of a Federal Reserve rate cut as early as September.
What does this mean?
Federal Reserve moves don't just shake up Wall Street -- they have a direct impact on Gulf economies, since most regional currencies are tied to the US dollar. When traders ramped up bets on an upcoming rate cut, Gulf stocks quickly followed suit: Qatar's index rose 0.8%, with financial heavyweights like Qatar National Bank and Qatar Islamic Bank leading the way. Dubai's market added 0.4%, helped by Emaar Properties and a nearly 4% surge in Salik after it posted a 50% profit jump. Still, there were bumps -- Air Arabia's shares dropped after a weaker second quarter. Over in Saudi Arabia, the main index nudged higher, with standout gains like Saudi Printing and Packaging's 8% pop after securing fresh financing. Beneath the surface, earnings showed a mixed picture: some firms, like Salik and RAK Properties, posted strong profits, while others, including Investcorp Capital and Air Arabia, saw notable declines.
Gulf bourses tend to move in step with US policy shifts, thanks to the dollar peg and close financial links. Rate cuts from the Fed can make regional stocks more attractive and boost liquidity, even if earnings remain a mixed bag. Strong updates from names like Salik and RAK Properties hint that select sectors could shine if supportive trends last.
The bigger picture: US policy shifts are shaping growth closer to home.
A US rate cut would loosen financial conditions for Gulf economies, benefiting key areas like real estate, banking, and industry. But as uneven earnings show, not every company will ride the wave -- global and local trends will keep dictating which sectors pull ahead as the year unfolds.