Gulf markets fall as rate cut optimism fades; #Saudi index near two-year low | Reuters

Gulf markets fall as rate cut optimism fades; Saudi index near two-year low | Reuters

Major Gulf stock markets gave up early gains to close down on Monday, as investor optimism over a U.S. rate cut and higher oil prices gave way to concerns about excess crude supplies.

Saudi Arabia's benchmark index (.TASI), opens new tab fell 0.9% to its lowest level in nearly two years, pressured by broad-based sectoral losses.

Al Rajhi Bank (1120.SE), opens new tab, the world's largest Islamic lender, and oil giant Saudi Aramco (2222.SE), opens new tab both fell 0.9%. Elsewhere, Theeb Rent a Car (4261.SE), opens new tab dropped more than 2% as its shares traded ex-dividend.

Dubai's main share index (.DFMGI), opens new tab also retreated 0.9%, with nearly all sectors closing in negative territory. Emirates NBD (ENBD.DU), opens new tab led the losses, falling almost 3%.

Emirates Integrated Telecommunications Company, better known as du, declined 3% after it launched a secondary share sale as one of its main investors, a Mubadala subsidiary, trims its holding. The transaction could generate about AED 3.39 billion ($923 million), with du receiving no proceeds from the sale.

Abu Dhabi's index (.FTFADGI), opens new tab edged down 0.7%.

Abu Dhabi Commercial Bank (ADCB.AD), opens new tab tumbled 7.5% - its steepest fall in more than three years - after the UAE's third-largest bank by assets proposed a rights issue priced 30% below the last close, aiming to raise 6.1 billion dirhams ($1.66 billion).

Qatar stock index (.QSI), opens new tab declined 0.6%, hit by a 0.7% fall in Qatar Islamic Bank (QISB.QA), opens new tab.

The U.S. Federal Reserve's expected rate cut next week - driven by weaker U.S. job growth and a rise in unemployment to a near four-year high of 4.3% - initially appeared supportive for sentiment.

However, investor optimism waned during the session as traders had already fully priced in a 25-basis point (bp) cut, with just an 8% chance of a larger 50-bp move, according to the CME FedWatch tool.

The Fed's stance carries heavy clout in the Gulf, where most currencies are pegged to the U.S. dollar, anchoring regional monetary policy.

Outside the Gulf, Egypt's blue-chip index (.EGX30), opens new tab rebounded 0.4%, supported by a 1.9% gain in Commercial International Bank (COMI.CA), opens new tab.