Most Gulf markets slip after Iran and US exchange strikes

Most Gulf stock markets ended lower on Monday after Iran and the U.S. exchanged strikes, while Israel ordered troops to push further into Lebanon in its battle with Tehran-backed Hezbollah.

The U.S. said it struck Iranian military sites over the weekend, and Iran’s Revolutionary Guards said on Monday they had targeted a U.S. base in response, marking the latest exchange amid negotiations to end the three-month-old war.

The fighting, which followed Israel-Lebanon peace talks hosted by Washington on Friday, dampened hopes that the U.S. and Iran could soon announce an extension of their ceasefire.

Saudi Arabia’s benchmark index dropped 0.6%, hit by a 0.8% fall in Al Rajhi Bank and a 0.6% decrease in oil major Saudi Aramco.

The Qatari index retreated 1.1%, as most of its constituents were in negative territory, including Qatar Islamic Bank , which declined 2.8%.

Renewed uncertainty over the Iran war is weighing on sentiment. Daniel Takieddine, co-founder and CEO of Sky Links Capital Group, said markets are likely to remain cautious, with limited risk appetite until there is clearer progress toward a resolution and the Strait of Hormuz reopens.

In Abu Dhabi, the index was down 0.5%, with the country’s biggest lender First Abu Dhabi Bank falling 2.6%, as the lender has exposure to the insolvencies of properties linked to mortgage lender Market Financial Solutions, according to the Financial Times.

The lender did not immediately respond to a Reuters request for comment.

Dubai’s main share index bucked the trend to close 0.3% higher, helped by a 2.8% rise in toll operator Salik .

U.S. President Donald Trump said on Friday he would soon decide on a proposed deal to extend the ceasefire with Iran, though the two countries still appear to differ on significant issues that have been central to the conflict.

Oil prices rose more than 2% in early trading on Monday, stoking concerns around inflation and interest rate hikes.

Outside the Gulf, Egypt’s blue-chip index rose 0.4%.