Most Gulf equities were down yesterday and Boursa Kuwait halted trading after US and Israeli strikes on Iran prompted retaliatory attacks across nearby US targets in Gulf cities, raising fears of prolonged regional instability.
Trading in Middle East markets is an early indicator of how investors measure any impact on assets from oil to safe-haven currencies and gold.
Analysts at Barclays raised their Brent crude forecast to about $100 a barrel on Saturday from an earlier estimate of $80.
In a rare move, Boursa Kuwait suspended trade until further notice citing the “exceptional circumstances” the country is facing.
In Saudi Arabia, the region’s biggest stock market, the benchmark index pared its losses to close 2.2 per cent lower compared with a 4.6pc drop early in the session.
Decliners included Al Rajhi Bank at 3pc and budget airline Flynas at 6.9pc, its biggest intraday fall since its initial public offering (IPO) in June last year. Elsewhere, Jabal Omar Development, which runs the Jabal Omar complex of hotels and property within walking distance of the Grand Mosque in the Muslim holy city of Mecca, was down 2.6pc.
Saudi shipping firm Bahri also declined 4.2pc.
Oil behemoth Saudi Aramco, however, advanced 3.4pc, registering its biggest intraday gain in over four months amid expectations of rising oil prices.
“GCC markets are likely to remain under pressure as investors price in a higher and potentially prolonged geopolitical risk premium following the recent escalation in the region,” said Tahir Abbas, head of research at Oman’s Ubhar Capital, referring to GCC countries.
“While higher oil prices provide a near-term fiscal cushion for regional governments, the more material concern is the risk of affected shipping routes, particularly through the Strait of Hormuz, which would have broader implications for energy flows and trade.”
Gulf stock markets face heightened correction risk and volatility as geopolitical tension drives a risk-off mood, pressuring prices and expectations, said XTB Mena senior market analyst Hani Abuagla. Investors will track regional developments and any further escalation or real-economy damage could deepen the sell-off, he said.
The Muscat stock index trimmed its decline to 1.4pc after sliding more than 3pc in a broad-based sell-off. Bahrain’s stock index retreated 1pc, while Qatar’s stock exchange was closed for a bank holiday. Outside the Gulf, Egypt’s blue chip index settled 2.5pc down, after it plunged 5.5pc in early trade.
Disruption to shipping traffic through the Strait of Hormuz also remains a key risk, weighing on sentiment and disrupting normal operations across a range of sectors, Abuagla said.
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