Gulf stock markets mixed as caution grows ahead of US Fed rate announcement

Most stock markets in the Gulf were mixed on Wednesday as some caution crept in over the size of an expected US interest-rate cut in the Federal Reserve's monetary policy announcement later in the day.

A 50-basis-point rate cut, as expected by investors, will be key in further driving global risk appetite. However, economists favouring a 25-bps cut argue that the current state of the US economy doesn't warrant a bigger move.

Market expectations on the size of a US rate cut have been volatile of late, with only a 14% chance of a 50-bps cut priced in as of exactly a week ago, according to CME's FedWatch Tool.

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

Saudi Arabia's benchmark index gained 0.3%, helped by a 4.3% increase in Saudi Awwal Bank.

The Saudi market is seeing the start of Arabian Mills' initial public offering, following the successful IPO of Al Majed Oud, said Joseph Dahrieh, Managing Principal at Tickmill.

"The strong IPO activity is expected to boost liquidity, attract investors, and help diversify the market, potentially stimulating economic growth and encouraging more listings."

Dubai's main share index eased 0.1%, hit by a 1% fall in blue-chip developer Emaar Properties. In Abu Dhabi, the index closed 0.1% lower.

Oil fell after two sessions of gains after an industry report showed increasing US crude and fuel inventories, offsetting rising tension in the Middle East and the potentially bullish impact of a US interest rate cut.

Outside the Gulf, Egypt's blue-chip index 0.6%, with Ezz Steel Co advancing 9.1%.