Most Gulf stock markets moved lower on Thursday as investors reacted to signs that a tenuous regional truce could be weakening, elevating concerns about extended geopolitical risk.
Markets appeared to turn after reports that Israel continued strikes on Lebanon and Iran said it would be "unreasonable" to pursue negotiations on a lasting peace arrangement. Both Israel and the United States clarified that the two-week ceasefire did not extend to Lebanon, and Israeli Prime Minister Benjamin Netanyahu indicated strikes would continue.
There were also reports of attacks on energy-related targets. An oil industry source said Iran targeted oil infrastructure in neighbouring Gulf states, including a Saudi pipeline that serves as an alternate route to the blockaded Strait of Hormuz. Separate reports said Kuwait, Bahrain and the UAE experienced missile and drone strikes.
Market moves across regional bourses were uneven but largely negative. Dubai's main index fell 1.5% following a rally the previous day that had pushed the market higher by more than 6%. The slide was led by a 3.9% decline in blue-chip developer Emaar Properties (DFM:EMAR) and a 3.3% drop in lender Emirates NBD (DFM:ENBD). Budget carrier Air Arabia (DFM:AIRA) bucked the direction, rising 1.8%.
In Abu Dhabi the index eased 0.3%, with Aldar Properties (ADX:ALDAR) down 3.2%. Qatar's index closed 0.2% lower, with Qatar National Bank (QE:QNBK) slipping 0.3%.
Saudi Arabia's benchmark index was unchanged on the day. Saudi Aramco (TADAWUL:2222) posted a 0.8% gain.
The United Arab Emirates said it would seek clarity on the terms of the two-week U.S.-Iran ceasefire. A Foreign Ministry spokesperson said on X that the UAE wants assurance that Tehran will fully commit to halting regional attacks and will unconditionally reopen the Strait of Hormuz.
Summary
Equity markets across the Gulf retreated after news that the regional ceasefire may not hold, with targeted strikes and disputed ceasefire coverage prompting risk-off sentiment among investors.
Key points
- Most Gulf indices fell as geopolitical tensions resurfaced, hitting property and banking shares in Dubai and Abu Dhabi.
- Energy infrastructure was reported targeted, including a Saudi pipeline used as an alternative to the Strait of Hormuz, adding pressure to energy and logistics sectors.
- Saudi Arabia's index was flat while Saudi Aramco rose modestly, reflecting mixed sector impacts.
Risks and uncertainties
- Durability of the two-week U.S.-Iran ceasefire is in doubt, creating uncertainty for regional markets and investors in energy and financial sectors.
- Reported missile and drone strikes on Kuwait, Bahrain and the UAE threaten oil infrastructure and transport links, posing risks to energy supply routes and related industries.
- Continued strikes on Lebanon outside the ceasefire's stated scope could broaden conflict exposure and affect investor confidence in the region.