Gulf equity markets rebounded after days of battering, along with Asian stocks, as oil retreated from a peak of nearly $120 per barrel, after US President Donald Trump indicated the war with Iran might be over soon.
Dubai stocks led most Gulf bourses higher, with the benchmark DFM General Index jumping 3.14 per cent on Tuesday at 12.00 pm UAE time, joining the relief rally in the US and Asian equities markets.
The Dubai Financial Market, which slumped 2.76 per cent on Monday, clawed back the lost ground during the previous session, helped by gains in banking stocks.
Dubai Islamic Bank was trading 7.14 per cent higher after falling 4.6 per cent on Monday, while Emirates NBD, the biggest lender in the emirate, was up 3.26 per cent, and the DFM added more than 9 per cent. Shares of Air Arabia also climbed more than 5 per cent in high-volume trade.
Deyaar Development rose 5.7 per cent after retreating 4.7 per cent in the previous session, while Union Properties surged 10.5 per cent.
Emaar Properties, the largest developer in Dubai by market value, however, continued to decline, dropping almost 1.11 per cent, adding to its 4.6 per cent slide on Monday.
The main equities measure of the Abu Dhabi Securities Market also rose 1.27 per cent, helped by gains in banking stocks on Tuesday.
Abu Dhabi Commercial Islamic Bank added 7.5 per cent, Abu Dhabi Commercial Bank advanced 8.4 per cent after slumping 4.9 per cent on Monday, while First Abu Dhabi Bank was up more than 3 per cent.
Aldar Properties, the largest listed developer in the UAE capital, however, continued to lose ground, shedding more than 1.5 per cent.
Elsewhere in the region, equity markets also rode the positive momentum, with stocks in Doha adding 1 per cent. Kuwait's main measure added 0.7 per cent.
Stocks in Saudi Arabia advanced 0.35 per cent, while Bahrain dropped more than 1 per cent. Equities in Muscat dropped 0.5 per cent.
“Trump's de-escalatory comments will come as a relief to global markets and particularly the GCC,” Hasnain Malik, head of emerging and frontier market investment strategy at Tellimer, told The National.
“But there are questions that will persist on regional security because Israel has not realised its maximalist war objectives in Iran”, which in the first place led to Iran crossing the “red lines” of attacking its Gulf neighbours, he added.
Nearing an end?
The rise in Gulf equities follows a rebound in Asian stocks that tracked an overnight rally in US stocks after Mr Trump said the war was nearing an end.
Japanese and Korean stocks that took a battering over the past few trading sessions rose, with Nikkei 225 jumping 2.78 per cent at close, while South Korea’s Kospi climbed 4.67 per cent.
Australia's S&P/ASX 200 rose 1.14 per cent, Hong Kong's Hang Seng added 1.56 per cent, the Shanghai Composite index rose 0.4 per cent, while India’s BSE Sensex Index advanced 0.76 per cent.
The US and Israel launched their military campaign against Iran on February 28, hitting targets across the length and breadth of the country. In retaliation, Tehran has fired drones and missiles at Arab nations across the Middle East, intended to hit US interests and Washington's allies in the region.
The relentless bombing by the US and Israel, which also killed Iranian supreme leader Ayatollah Ali Khamenei, has caused one of the worst conflicts in the Middle East, leaving global financial and energy markets in a state of flux.
Extreme volatility
Mr Trump's comments about a speedy end to the war in the Middle East and his suggestion the US could over control of the Strait of Hormuz sparked a slide in global crude prices, which nearly touched $120 per barrel on Monday.
However, Iran's Islamic Revolutionary Guards Corps said it will not allow “one litre of oil” to be shipped from the Middle East if US and Israeli strikes continue, leading to conflicting remarks about how long the war could last.
Brent, the benchmark for two-thirds of global oil, was down 8.3 per cent to $90.67 a barrel after earlier sliding as much as 11 per cent yesterday. Even after Tuesday’s decline, the price has surged about 50 per cent this year.
WTI, which tracks US crude, was down 8.6 per cent to $86.58 per barrel.
The sharp reversals indicate extreme sensitivity of markets to headlines from the Middle East conflict.
“The fact that investors overreact to every piece of news without questioning feasibility adds another layer of difficulty when navigating markets,” Ipek Ozkardeskaya, senior analyst at Swissquote, said.
“Part of yesterday’s optimism came after Trump said the war would end ‘soon’ and that the US was ahead of schedule. Concretely, however, the conflict in the Middle East continues at full speed, political developments are not pointing to a near-term resolution, and there is little clarity about the US plans in this war – even officials’ statements sometimes contradict each other.”
