Geopolitical tensions between Iran and Israel impact Gulf stock markets

Gulf stock markets witnessed a decline on Sunday, indicating investor fear in the wake of the Iranian attack on Israel. The main index in the Kingdom of Saudi Arabia witnessed a decline of 1.8% in the first hours of trading, and the main index in Qatar decreased by 1.6%, as the Gulf financial institution QNB incurred significant losses.

In Israel, trading showed slight changes, as the main Tel Aviv index and the main Tel Aviv index opened slightly lower. This comes after the Iranian drone and missile strike, which was an act of retaliation for what is believed to be an Israeli airstrike. Although the damage to Israel has been modest, investors are focused on the potential escalation of the conflict.

An economist from Annex Wealth in Milwaukee provided insight into market reactions, noting that if the conflict does not escalate, stocks may recover as tensions ease. However, he noted that commodities such as oil, gold and currencies such as the dollar may still carry a risk premium due to the ongoing conflict.

Brent crude futures rose 71 cents to $90.45 a barrel on Friday, as prices approached six-month highs last week amid concerns about conflict between Iran, a major OPEC producer, and Israel. In addition, prices rose to a record high above $2,400 an ounce on Friday, reflecting continued demand for safe-haven assets.

These geopolitical tensions come after a series of events that began with the Iranian-backed Hamas attack on Israel on October 7, followed by the invasion of Gaza. Since then, the MSCI world equity index has reached new highs.

Looking back, we find that the main stock index in Saudi Arabia achieved a significant rise of almost 20% from October 8 until the last session before the Eid al-Fitr holiday on April 4. Meanwhile, the main index of the Qatari Stock Exchange saw a slight decline of approximately 0.8% from October 8 until its last close on April 8.

Other markets in the region also reacted on Sunday, as the Kuwait Stock Exchange’s main index fell by 0.9% and the Sultanate of Oman’s index fell by 0.2%. In contrast, Bahrain’s main index went against the trend, registering a 0.9% rise. This unfolding situation indicates that regional markets are sensitive to developments between Iran and Israel, and investors are closely monitoring the impact of these geopolitical events on market stability.

Reuters contributed to this article.

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