Gulf equity indexes mostly ended lower on Tuesday as tension flared between regional oil powers and neighbours Saudi Arabia and the United Arab Emirates.
Dubai’s main share index retreated 2%, LSEG data showed, while Abu Dhabi’s main index and Saudi Arabia both dropped 1% each.
Saudi Arabia said its national security was a red line, hours after a Saudi-led coalition launched strikes on what it described as foreign military support to UAE-backed southern separatists in Yemen, and also asked UAE forces to leave the country.
An offensive this month has pitted the Southern Transitional Council (STC) against Saudi-supported Yemeni government troops, bringing the two Gulf allies closer than ever to an all-out conflict in Yemen, mired in civil war since 2014.
The United Arab Emirates said it was disappointed with Saudi Arabia’s statement regarding Yemen, and surprised by the airstrike on Mukalla.
The Dubai index saw its biggest daily decline since June.
Blue-chip developer Emaar Properties fell 2.8% and sharia-compliant lender Dubai Islamic Bank lost 2.3%.
Among Saudi shares, Saudi Arabian Mining Co slipped 2.6% and Al Rajhi Bank eased 0.3%. Oil giant Saudi Aramco was down 0.3%.
Oil prices – a catalyst for the Gulf’s financial markets – were little changed as investors took stock of dented hopes of a Russia-Ukraine peace deal and rising geopolitical tensions in the Middle East around Yemen.
The Qatari index finished flat. Bahrain bucked the trend with a 0.6% rise after the country announced several fiscal reform measures on Monday.
Outside the Gulf, Egypt’s blue-chip index edged 0.1% lower.
Saudi Arabia dropped 1% to 10,382
Abu Dhabi declined 1% to 9,964
Dubai retreated 2% to 6,015
Qatar finished flat at 10,794
Egypt eased 0.1% to 41,690
Bahrain gained 0.6% to 2,077
Oman fell 0.6% to 5,860
Kuwait lost 1.3% to 9,444
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