Key Takeaways
- Most Gulf stock markets ended lower on Wednesday.
- Fighting between Yemen’s Houthis and Saudi-backed government forces intensified.
- Saudi Arabia’s benchmark index slipped 0.5%.
Gulf stock markets experienced a downturn on Wednesday, with most indices closing lower as a result of escalating tensions between Yemen’s Houthis and Saudi-backed government forces.
The conflict has intensified, with Yemeni government forces launching a major offensive to reclaim lost territory, backed by increased Saudi air strikes. The Houthis also launched attacks, including ballistic missiles and explosive drones, on Aden International Airport, marking a significant escalation in the conflict.
Hostilities between Saudi Arabia and the Houthis have also escalated, with two attacks on airports in Jazan and Najran, injuring three people and causing limited damage. Saudi Arabia’s aviation authority reported these incidents.
The ongoing conflict has impacted regional markets, with Saudi Arabia’s benchmark index slipping 0.5%, dragged down by a 0.9% fall in Al Rajhi Bank. The Saudi-led coalition intercepted and destroyed a Houthi ballistic missile fired towards Khamis Mushait.
Market sentiment remains sensitive to geopolitical developments and diplomatic signals. While Qatar’s mediation in US-Iran talks offers a constructive backdrop, the lack of clear progress continues to restrain risk appetite, particularly as disruptions to shipping in the Strait of Hormuz persist.
Ranim Turfa, head of research & market analysis at Tickmill, stated that higher regional oil exports have provided some support, but the mood remains highly sensitive to diplomatic progress and any easing of shipping disruptions.
Outside the Gulf, Egypt’s blue-chip index eased 0.1%, while Abu Dhabi, Dubai, Qatar, Bahrain, Oman, and Kuwait also experienced declines. Abu Dhabi’s index fell 0.3%, Dubai’s eased 0.2%, and Qatar’s declined 0.5%.
The overall sentiment in the Gulf markets is anchored to geopolitical developments and diplomatic signals, with further escalation potentially weighing on markets. However, meaningful negotiations and solid third-quarter earnings may help support a broader recovery, according to market analysts.
