By Ateeq Shariff
Gulf stock markets ended mixed on Thursday, amid rising expectations of a Federal Reserve rate cut next month, while subdued oil prices capped overall risk appetite.
With a dearth of data on the U.S. economy following the end of the government shutdown, investors are focusing intensely on statements from Federal Reserve officials, with remarks this week significantly strengthening expectations for a rate cut.
According to the CME FedWatch Tool, traders now assign an 85% probability to a rate cut next month, up sharply from just 30% a week ago.
U.S. monetary policy shifts have a significant impact on Gulf markets, where most currencies are pegged to the dollar.
Saudi Arabia's benchmark index TADAWUL:TASI finished 0.1% higher, snapping a three-session losing streak, with Al Rajhi Bank TADAWUL:1120 gaining 0.4% and Saudi National Bank TADAWUL:1180, the country's biggest lender by assets, up 0.7%.
The market remains impacted by lower oil prices and their bearish outlook. If the downtrend in crude oil continues, it may further weigh on the index, said Daniel Takieddine, co-founder and CEO of Sky Links Capital Group.
Elsewhere, oil behemoth Saudi Aramco TADAWUL:2222 inched 0.4% higher.
Oil prices - a catalyst for the Gulf's financial markets - steadied on Thursday as market participants weighed talks to end the against the impact of Western sanctions against Russian supply, though trading was set to remain thin due to the U.S. Thanksgiving holiday.
Dubai's main share index DFM:DFMGI was up 0.1%, helped by a 3.3% leap in budget airline Air Arabia DFM:AIRARABIA.
According to Takieddine, the market's underlying fundamentals are still sound while a sustained recovery would depend on a broader improvement in investor sentiment.
In Abu Dhabi, the index ADX:FADGI dropped 0.3%, with Dana Gas ADX:DANA shedding 2.6%, after a rocket strike targeted its Khor Mor facility, one of the largest gas fields in Iraqi Kurdistan.
The attack on Wednesday prompted the suspension of operations at the gas field and caused major power cuts across the region.
The Qatari index QSE:GNRI slipped 0.4%, with Qatar Islamic Bank QSE:QIBK retreating 1.1%.
Outside the Gulf, Egypt's blue-chip index EGX:EGX30 advanced 1.3%, with Commercial International Bank EGX:COMI closing 1.6%.
Saudi Arabia
TADAWUL:TASI edged up 0.1% to 10,641
Abu Dhabi
ADX:FADGI fell 0.3% to 9,705
Dubai
DFM:DFMGI rose 0.1% to 5,815
Qatar
QSE:GNRI dropped 0.4% to 10,645
Egypt
EGX:EGX30 gained 1.3% to 40,039
Bahrain
BAHRAIN:BHBX was up 0.2% to 2,040
Kuwait
(.BKP) eased 0.3% to 9,413