DUBAI: Gulf equities ended lower on Monday, on fears the ceasefire between Washington and Tehran could unravel after the US seized an Iranian cargo vessel, while traffic through the Strait of Hormuz remained largely suspended.
Hopes for a more lasting peace in the region dimmed after Iranian state media reported that Tehran had rejected fresh talks and would not take part in a second round of negotiations the US had hoped to convene before the ceasefire expires on Tuesday.
Now in its eighth week, the war has triggered a historic shock to global energy supplies, sending oil prices soaring as the Strait of Hormuz remains effectively closed.
Dubai’s main share index retreated 2.1 percent, snapping four sessions of gains, hit by a 2.3 percent fall in blue-chip developer Emaar Properties and a 2.9 percent slide in toll operator Salik Co.
Budget airline Air Arabia finished 3 percent lower.
Renewed Middle East tensions hit sentiment, with regional markets driven by geopolitical headlines and the Strait of Hormuz in focus after a shift in rhetoric over the weekend, said Daniel Takieddine, co-founder and CEO of Sky Links Capital Group.
Resilient domestic fundamentals may help limit the downside, while signs of de-escalation or strong earnings could support a rebound.
In Abu Dhabi, the index lost 0.8 percent, dragged down by a 2.7 percent decline in Aldar Properties.
The United Arab Emirates has begun talks with the United States on a potential financial backstop should the US-Israeli war on Iran deepen the Gulf nation’s crisis, the Wall Street Journal reported on Sunday. Reuters could not immediately verify the report.
Saudi Arabia’s benchmark index closed 0.9 percent lower, weighed down by a 1.2 percent fall in Al Rajhi Bank. On the other hand, Saudi Aramco gave up early gains to end flat.
According to Takieddine, elevated oil prices could offer a supportive backdrop, helping to cushion downside risks and stabilize sentiment.
Brent crude futures advanced USD4.37, or 4.8 percent, to USD94.75 a barrel, as investors dealt with conflicting messages about the war. The Qatari index lost 0.4 percent, with Qatar Islamic Bank dropping 1.8 percent.
US President Donald Trump had earlier warned that the United States would destroy Iran’s bridges and power plants if Tehran refused his terms, repeating threats he had made throughout the war.
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