Gulf bourses retreat as Saudi-Houthi tensions surge

Most Gulf stock markets ended lower on Wednesday as fighting between Yemen’s Houthis and Saudi-backed government forces intensified on several fronts.

Yemeni government forces are pushing a major offensive to retake ground lost to weeks of Houthi advances, backed by stepped-up Saudi air strikes.

The Houthis struck Aden International Airport on Wednesday with ballistic missiles and explosive drones, Yemen’s Transport Ministry said, marking a sharp escalation in clashes with Saudi-backed government forces.

Hostilities between the kingdom and the Houthis have escalated as well. Two attacks on Monday evening targeted airports in Jazan and Najran, injuring three people and causing limited damage, Saudi Arabia’s aviation authority said.

Saudi Arabia’s benchmark index slipped 0.5%, dragged down by a 0.9% fall in Al Rajhi Bank.

The Saudi-led coalition, which is trying to retake strategic territory seized by the group, said it had intercepted and destroyed a Houthi ballistic missile fired towards Khamis Mushait in the kingdom’s southwest.

Meanwhile, there was no sign of a thaw between Washington and Tehran. On Tuesday, US President Donald Trump said nobody knew who was running Iran during the conflict, which is now in its eighth month.

Dubai’s main share index fell 0.2%, hit by a 1.3% drop in top lender Emirates NBD .

Market sentiment remains anchored to geopolitical developments and diplomatic signals. While Qatar’s mediation in US-Iran talks offers a constructive backdrop, the lack of clear progress continues to restrain risk appetite, particularly as disruptions to shipping in the Strait of Hormuz persist, said Ranim Turfa, head of research & market analysis, MENA, at Tickmill.

Higher regional oil exports have offered some support, but the mood remains highly sensitive to diplomatic progress and any easing of shipping disruptions. Further escalation could weigh on markets, while meaningful negotiations and solid third-quarter earnings may help support a broader recovery, Turfa said.

In Abu Dhabi, the index lost 0.3%, while the Qatari index declined 0.5%.

Outside the Gulf, Egypt’s blue-chip index eased 0.1%.