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Most Gulf markets firm on US rate cut bets, oil strength

  //stocks-investing.news-articles.net/content/202 .. rkets-firm-on-us-rate-cut-bets-oil-strength.html
  Published in Stocks and Investing on Tuesday, September 16th 2025 at 11:21 GMT by reuters.com
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Gulf Markets Hold Firm as U.S. Rate‑Cut Hopes and Strong Oil Prices Bolster Investor Sentiment

On September 16, 2025, the Gulf Cooperation Council (GCC) stock exchanges posted a muted but broadly positive day, reflecting a mix of optimism about a potential U.S. Federal Reserve rate cut and buoyant commodity prices, particularly oil. Despite a backdrop of continued economic uncertainty and global inflation pressures, the markets largely stayed in line with their recent upward trend, underscoring the enduring influence of oil on Gulf equity valuations.

1. Daily Market Overview

The Dubai Financial Market’s DFM30 index rose by 2.1 %, its best performance since early August, closing near 4,000 points. The Abu Dhabi Securities Exchange (ADX) mirrored this sentiment with a 1.6 % gain, while Bahrain’s BFX index added 0.9 %. Qatar’s Qatar Stock Index (QSI) edged up 0.5 %, and Oman’s BOV increased 0.6 %. Kuwait’s KSE showed a more modest 0.3 % rise, the smallest increase among the GCC exchanges.

A look at the market movers revealed that oil‑related stocks — especially those in the petrochemical, refining, and downstream sectors — were the main drivers. Companies such as Saudi Aramco, Kuwait Petroleum, and Qatar Petroleum posted gains in the low‑single digits. In contrast, consumer‑goods and financial‑sector firms had more mixed outcomes, with some showing slight declines as investors weighed the impact of a weaker dollar and potential inflationary pressures.

2. U.S. Federal Reserve Rate‑Cut Expectations

The primary catalyst for the day’s firm performance was the mounting expectation that the U.S. Fed will cut interest rates in 2025. Market participants were closely watching the Fed’s “dot plot,” which suggested a gradual easing of monetary policy later in the year as inflation continues to trend toward the 2 % target.

The 10‑year Treasury yield, which had hovered around 4.8 % in early September, fell modestly to 4.75 %, reflecting a shift toward a more dovish outlook. Analysts noted that lower U.S. yields tend to lift commodity prices, as they reduce the cost of borrowing for commodity‑heavy companies and improve risk‑on sentiment across global markets.

The Reuters article referenced the U.S. Federal Reserve’s upcoming meeting on September 18 (the exact date of the meeting was not specified in the article but was a known upcoming event), and highlighted that even a modest rate cut would likely lift the dollar and, by extension, bolster Gulf equities that are heavily weighted toward oil exports.

3. Strong Oil Prices and OPEC+ Production Cuts

Oil prices were a key underpinning of the market rally. Brent crude was trading at $74.20 / barrel, while West Texas Intermediate (WTI) hovered at $71.90 / barrel. These levels were bolstered by the OPEC+ production cut agreement reached in March 2025, which committed the group to reducing output by 1.25 million barrels per day (bpd) through the end of 2025.

The Reuters piece linked directly to an OPEC+ press release confirming the new production target, emphasizing that the cuts were designed to support price stability in a market that had seen increased supply from non‑OPEC producers in the preceding months. Market participants acknowledged that sustained production cuts would likely keep oil prices at a level that benefits Gulf exporters.

In addition to OPEC+ actions, the article noted the steady demand outlook for oil in emerging markets, especially Asia, and the relatively low geopolitical risk profile in the Gulf region at the time, which together contributed to a bullish sentiment among commodity investors.

4. Broader Economic Context

While the oil backdrop was positive, Gulf markets still reflected caution regarding global economic fundamentals. The Reuters article cited concerns over the U.S. manufacturing slowdown and European debt‑service pressures that could dampen demand for energy. In particular, the Eurozone’s growth forecast for 2025 was revised downward to 0.9 %, prompting some investors to hedge against potential downward pressure on energy consumption.

Nevertheless, the GCC’s reliance on commodity revenues, coupled with their diversified energy portfolios in some cases (e.g., UAE’s renewable initiatives), helped mitigate the impact of broader macroeconomic headwinds. Analysts suggested that Gulf investors remain focused on long‑term structural changes in the region, such as Saudi Arabia’s Vision 2030 and the UAE’s push toward a knowledge‑based economy, which could eventually reduce the region’s sensitivity to oil price swings.

5. Market Sentiment and Analyst Forecasts

Several analysts quoted in the Reuters piece noted that risk‑on sentiment had reached a “comfort zone” after several weeks of subdued volatility in global equity markets. One senior analyst from J.P. Morgan Middle East remarked that “the combination of a dovish Fed outlook and robust oil prices provides a strong tailwind for GCC equities.”

Meanwhile, a Bloomberg Gulf Markets report highlighted that the exchange‑rate volatility in the Gulf region was low, with the UAE Dirham and Saudi Riyal remaining tightly pegged to the U.S. dollar. This stability reduces currency risk for foreign investors and supports continued capital inflows into Gulf markets.

6. Outlook for the Coming Weeks

Looking ahead, the Reuters article suggested that Gulf markets will remain sensitive to developments in the U.S. Federal Reserve’s policy cycle and the evolving dynamics of the global energy market. Key watch points include:

• U.S. Federal Reserve’s next meeting on September 18, where the central bank’s stance on inflation and the timing of rate cuts could shift sentiment.
• OPEC+ production adjustments in early 2026, which may influence oil price trajectories.
• Global economic indicators, especially U.S. manufacturing PMI and Eurozone debt‑service ratios, which could affect commodity demand.

In addition, the Gulf region’s own economic reforms — such as Saudi Arabia’s push toward economic diversification and the UAE’s continued investment in renewable energy — may gradually reduce the region’s exposure to oil volatility, a trend that could shape investor expectations over the longer term.

7. Conclusion

On September 16, 2025, Gulf markets demonstrated resilience and a modestly positive trajectory, buoyed by expectations of a U.S. rate cut and strong oil prices underpinned by OPEC+ production cuts. While global economic concerns continue to loom, the markets’ focus on commodity strength and the region’s strategic economic reforms helped anchor investor confidence.

As the Federal Reserve’s policy path unfolds and OPEC+ maintains its production discipline, Gulf investors appear poised to ride a continued “risk‑on” wave, provided that global inflationary pressures remain manageable and geopolitical stability persists in the Middle East. The next few weeks will be pivotal in determining whether the positive momentum can sustain itself in the face of evolving macroeconomic dynamics.