Key Takeaways
- Major Gulf bourses ended lower as investor sentiment weakened due to escalating tensions between the U.S. and Iran.
- Saudi Arabia’s benchmark index reversed early losses, finishing 0.4% higher, while other regional markets declined.
- QatarEnergy notified Edison of force majeure on LNG deliveries until September.
Gulf stock markets experienced a downturn on Thursday as investor sentiment faltered amid escalating hostilities between the United States and Iran. The U.S. military launched a two-hour operation targeting dozens of Islamic Revolutionary Guard Corps facilities, including command centres and drone facilities, in response to Iranian missile strikes against U.S. forces in the Middle East.
The conflict intensified on Wednesday when the United States and Saudi Arabia conducted airstrikes on Iran-backed paramilitary groups in Iraq, marking the first publicly acknowledged Saudi participation in U.S.-led airstrikes. These operations were a direct response to drone attacks launched from Iraqi territory that targeted Saudi oil facilities.
Qatar’s index retreated 0.9%, with all its constituents ending in negative territory. The Gulf’s largest lender, Qatar National Bank, saw a decline of 1.4%. Additionally, QatarEnergy informed Edison, one of its major European customers, that it would extend force majeure on LNG deliveries until the end of September due to ongoing security concerns.
Despite the overall downturn, Saudi Arabia's benchmark index managed to reverse early losses and finished 0.4% higher, led by a 2.9% rise in Saudi National Bank. However, other regional markets faced challenges; Abu Dhabi gained 0.4%, while Dubai’s main share index declined 0.1%. Outside the Gulf, Egypt’s blue-chip index also lost 0.4% following confirmation that a drone strike caused a fire at the Mediterranean port of Damietta.
The economic impact of these hostilities was evident in Saudi Arabia's real gross domestic product (GDP), which contracted by 4.8% year-on-year in the second quarter, highlighting the severe economic fallout for the world’s top oil exporter and broader Gulf region.
Other key market movements included: Abu Dhabi at 9,879; Dubai at 5,792; Qatar at 9,921; Egypt at 53,442; Bahrain at 1,956; Oman at 7,277; and Kuwait at 9,215. These figures underscore the widespread impact of geopolitical tensions on regional financial markets.
Market analysts caution that caution may continue to weigh on local markets as uncertainty over regional security conditions persists. Hani Abuagla, Senior Market Analyst at XTB MENA, stated, 'Investors remain focused on persistent geopolitical tensions and shipping-route disruptions.'
'Investors remained focused on persistent geopolitical tensions and shipping-route disruptions.'
Hani Abuagla, Senior Market Analyst at XTB MENA
