Most Gulf markets retreat on geopolitical woes

Most Gulf stock markets closed lower on Wednesday due to ongoing geopolitical tensions in the region, despite slightly lower-than-expected U.S. inflation data that boosted hopes for upcoming interest rate cuts.

Tehran has warned neighbours hosting U.S. troops that it would hit American bases if Washington strikes, a senior Iranian official told Reuters on Wednesday, as Iran seeks to deter Donald Trump’s threats to intervene on behalf of protesters.

The U.S. president urged Iranians to keep protesting, saying help is on the way. Iran in turn accused Trump of encouraging political destabilization and inciting violence.

Dubai’s main share index gave up early gains to conclude 0.9% higher, with blue-chip developer Emaar Properties retreating 1.4%.

In Abu Dhabi, the index was down 0.5%.

The Qatari benchmark lost 0.2%, hit by a 1.3% fall Qatar International Islamic Bank .

Saudi Arabia’s benchmark index rose 0.5%, with Al Rajhi Bank gaining 1% and Saudi National Bank , the country’s biggest lender by assets, advancing 1.7%.

Saudi equity markets gained ground on reform-driven foreign investor confidence and capital inflows, according to Milad Azar, market analyst at XTB MENA.

Oil price volatility from geopolitical tensions and supply concerns, however, poses two-way risk: rising crude could lift regional stocks, while falling prices may trigger renewed weakness.

U.S. consumer prices rose in December, driven by increased expenses for housing and groceries, reinforcing analysts’ views that the Federal Reserve would hold interest rates this month.

Investors expect two 25-basis-point rate cuts this year, with the earliest in June.

Gulf markets often track shifts in U.S. rate expectations, as most regional currencies are pegged to the dollar.

Oil prices rose on Wednesday for a fifth straight session on fears of Iranian supply disruptions due to a potential U.S. attack on Iran and possible retaliation against U.S. regional interests.

Outside the Gulf, Egypt’s blue-chip index declined 1.4%, snapping a 5-day winning streak.