Key Takeaways
- Most Gulf markets declined due to escalating regional risks.
- Saudi Arabia’s benchmark index remained unchanged, with Aramco gaining 0.6%.
- Houthi drones and missiles targeted Saudi cities, prompting Saudi airstrikes.
Most Gulf markets experienced a decline on Wednesday, driven by heightened regional tensions. Saudi Arabia’s benchmark index was flat, with oil major Saudi Aramco gaining 0.6%. The kingdom is offering additional crude cargoes to Asian refiners through ship-to-ship transfers off Oman’s Sohar port, following drone attacks that damaged a key pipeline linking its oil fields to the Red Sea.
Saudi warplanes struck Yemen, while the Iran-backed Houthi group launched drones and missiles at Saudi cities, according to their statement. Riyadh claimed it downed a Houthi drone south of Mecca before it entered restricted airspace, calling the incident a “red line.” The Houthis dismissed the claim, calling it propaganda.
The number of vessel transits through the Strait of Hormuz remained low, with only four ships recorded on Tuesday compared to seven the previous day. Persistent regional uncertainty and maritime incidents continued to weigh on market sentiment. Investors are closely monitoring for signs of diplomatic progress, including a rescheduled date for the Gulf states’ meeting with Iran.
Dubai’s benchmark index rose 0.7%, with most sectors advancing. Blue-chip developer Emaar Properties gained 3.4% after its board approved a one-time special dividend of AED 4.4 billion ($1.2 billion), or AED 0.50 per share. The Federal Reserve’s two-day policy meeting concluded later on Wednesday, with traders pricing in a 94.5% probability of a rate hike.
Outside the Gulf, Egypt’s blue-chip index lost 0.2%. Other markets, including Abu Dhabi, Bahrain, Oman, Kuwait, and Qatar, also experienced declines. Abu Dhabi’s index edged down 0.1% to 10,114, while Qatar’s declined 1.4% to 9,638. Bahrain was flat at 1,930, and Oman declined 0.9% to 7,550.
Persistent regional uncertainty, maritime incidents, and stalled diplomatic talks continue to impact market sentiment. Investors are closely monitoring for tangible signs of diplomatic progress, including a rescheduled date for the Gulf states’ meeting with Iran, said Joseph Dahrieh, managing director at Tickmill.
The U.S. Federal Reserve’s two-day policy meeting concluded later on Wednesday, with traders pricing in a 94.5% probability of a rate hike. Gulf markets typically track changes in U.S. monetary policy expectations because most regional currencies are pegged to the dollar.
