Major Gulf markets ease as US-Iran tensions keep investors on edge

By Ateeq Shariff

Most Gulf markets ended lower on Monday, as reciprocal strikes by the U.S. and Iran in recent days kept investors on edge despite an agreement between the two countries to stop further attacks.

A renewed push for diplomacy in the Middle East would come after several days of retaliatory strikes, triggered by an Iranian projectile that hit a cargo vessel in the Strait of Hormuz last week. Both sides have since accused each other of violating an interim ceasefire.

Uncertainty over the peace deal's durability pushed oil prices higher, although crude has since surrendered nearly all of its war-related gains as markets rapidly reassessed the likelihood of easing supply pressures.

The 14-point interim peace agreement, reached on June 17, was intended to stop the fighting that began after U.S. and Israeli action on February 28, reopen the strategically vital Strait of Hormuz, and allow negotiations to continue on issues including Iran's nuclear programme.

Saudi Arabia's benchmark index TADAWUL:TASI dropped 1.1%, with most of its constituents posting losses. The country's biggest lender Saudi National Bank TADAWUL:1180 fell 2.2% after its intention to redeem its $1.25 billion additional tier 1 sukuk.

Among other losers, oil giant Saudi Aramco TADAWUL:2222 slipped 1.8% a day after it snapped an eight-session losing streak.

Meanwhile, Aramco resumed crude oil loadings on Friday at its Ras Tanura terminal, west of the Strait of Hormuz, after they were halted for nearly four months, as oil producers ramped up output and exports ahead of an interim deal.

Dubai's main share index DFM:DFMGI eased 0.4%, with top lender Emirates NBD DFM:EMIRATESNBD losing 1.1% and budget airline Air Arabia DFM:AIRARABIA down 1.1%.

In Abu Dhabi, the index ADX:FADGI was down 0.4%, hit by a 1.1% drop in Abu Dhabi Islamic Bank ADX:ADIB and a 1.7% decline in the UAE's largest lender First Abu Dhabi Bank ADX:FAB .

"While regional uncertainty could continue to weigh on trading activity in the near term, the UAE's resilient economic fundamentals and strong corporate earnings could help limit downside risks and support a rebound once geopolitical concerns begin to subside," said George Pavel, general manager at Naga.com Middle East.

The Qatari index QSE:GNRI fell 0.4%, with energy and real estate stocks leading the losses. Qatar Gas Transport QSE:QGTS fell 2.3% and Industries Qatar QSE:IQCD slipped 0.8%.

Outside the Gulf, Egypt's blue-chip index EGX:EGX30 was down 1%, weighed down by a 2.3% loss in Commercial International Bank EGX:COMI and a 2.9% fall in Eastern Company EGX:EAST .