Gulf markets jump as traders bet on a U.S. interest rate cut

Gulf markets ended mostly higher on Sunday, with investors stepping back into recently dumped shares after a weaker-than-expected U.S. jobs report boosted expectations that the Federal Reserve will cut interest rates this week.

But the rally wasn’t felt everywhere. Saudi stocks went the other way, continuing a sharp drop that’s taken the kingdom’s benchmark to the edge of a two-year low.

According to data from Reuters, the Tadawul All Share Index in Riyadh dropped 0.2%, settling at 10,434 after a sluggish session where most sectors bled red. Al Rajhi Bank, the biggest Islamic bank on the planet, lost 0.4%, while ACWA Power, the Saudi energy firm with global ambitions, sank 2.7%.

Meanwhile, Aramco barely moved, rising 0.1%, just a day after hitting a five-year low. This slide from the region’s heavyweight players shows investors are still worried about Saudi Arabia’s near-term growth, despite oil prices ticking up slightly.

Qatar and Egypt rally as traders chase financials

While Saudi Arabia struggled, Qatar’s stock index pushed higher by 0.4%, closing at 11,132. The move was driven by bank stocks, with Qatar Islamic Bank jumping more than 1%, as traders in Doha showed renewed appetite for financial shares.

The bump followed last week’s global risk rebound triggered by softer U.S. job numbers, which many now believe gives Fed Chair Jerome Powell room to start easing. Investors are also bracing for more cuts later this year, possibly in October and December, betting that sluggish labor data will force the Fed’s hand.

The Gulf region feels the Fed’s decisions directly, since most local currencies are tied to the U.S. dollar. Any rate cut in Washington immediately filters into monetary policy across the region, giving traders even more reason to watch Powell’s moves closely this week.

Over in Cairo, Egypt’s EGX30 index climbed 0.5%, ending the session at 35,112. That marks the third day in a row of gains for Egyptian equities, driven by strength across multiple sectors.

One standout was Orascom Construction, which soared 4.7% after it made its official debut on Abu Dhabi’s main index last Thursday. The company continues to trade on the Egyptian Exchange as well, maintaining its dual presence across both markets.

Dragon Oil expands Egypt drilling with $30M Suez deal

The United Arab Emirates made its own headlines through Dragon Oil, the upstream unit of ENOC, which signed a new deal with Egyptian General Petroleum Corporation to drill at least two new wells in the East El-Hamd area of the Gulf of Suez. The investment is pegged at $30 million, according to a company statement.

Abdulkarim Ahmed Al Mazmi, who’s currently running Dragon Oil as acting CEO, said the deal fits into the company’s larger plan to grow its footprint in the region and cement its position in Egypt’s oil and gas sector.

Dragon Oil, founded in 1971 and based in Dubai, is already operating in Turkmenistan, Iraq, and Egypt, where it began activity in 2019. The company works alongside Gulf of Suez Petroleum Company (GUPCO) and EGPC, focusing on boosting both exploration and production in the region.

The rest of the Gulf region saw mixed results. Oman’s MSX30 index moved up 0.2% to 5,094, while Kuwait’s BKP index rose 0.8% to 9,414. Bahrain’s BAX index, however, slipped slightly by 0.1%, closing at 1,941.

Crude oil, the backbone of every Gulf economy, climbed a bit after Ukrainian drones struck a major Russian port, disrupting fuel operations. But gains were muted. Traders are still spooked by the Fed’s inflation battle and the real risk that a weak labor market might not mean strong demand.

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