Several stock markets in the Gulf region concluded on a lower note on Sunday, reflecting investor concerns after Iran conducted a retaliatory strike on Israel, heightening the potential for a broader regional conflict.
Last week, tensions escalated in the Middle East when Iran vowed retaliation against Israel for an air strike that resulted in the deaths of two Iranian generals and five military advisers at its embassy compound in Damascus. This retaliatory attack has increased apprehensions regarding the possibility of further escalation in the region’s conflict dynamics.
Saudi Arabia’s benchmark index experienced a 0.3% decline, initially dropping approximately 2% during the session. Notably, the country’s largest lender, Saudi National Bank, faced a notable decrease of 3.3%.
Meanwhile, the First Milling Company, a flour producer, saw a 1.4% decrease in its stock value as it traded ex-dividend. In contrast, renewable energy utility ACWA Power witnessed a significant surge of 6.7%, marking its fifth consecutive session of gains. The rise in ACWA Power’s shares follows its announcement on April 3 regarding the commencement of partial commercial operations at its Sirdarya gas-turbine plant in Uzbekistan. This positive momentum continued as the market reopened after the Eid holiday closure last week.
In Qatar, which also observed closure during the Eid holiday, the benchmark stock index recorded a decline of 0.8%. The majority of its constituents, including Qatar National Bank, faced negative performance, with the bank’s shares declining by 1.2%.
The anticipation of an Iranian response to the air strike in Damascus had been looming over Israel since last week. Iran’s Supreme Leader Ayatollah Ali Khamenei had stated that Israel “must be punished and shall be” for the operation, which he deemed equivalent to an attack on Iranian soil.
Furthermore, analysts have suggested that oil prices, which often serve as a catalyst for the Gulf’s financial markets, are likely to see an increase following Iran’s attack on Israel. However, the extent of these price hikes may hinge on Israel’s response to the retaliation.
The recent developments in the Gulf region have underscored the importance of closely monitoring geopolitical tensions, as they have the potential to significantly impact financial markets and investor sentiment. As the situation unfolds, market participants remain vigilant, assessing the implications of regional events on investment strategies and portfolio management.
