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Dubai drags Gulf market down as Iran war fears weigh

Investors remained cautious about inflation and growth risk stemming from the U.S./Israeli war on?Iran.

According to the Pentagon and Iranian sources, the U.S. launched the most intense airstrikes in the war. Global markets were still betting that Donald Trump would try to end the conflict soon.

The Strait of Hormuz has been effectively closed by the war. It is a major route used for approximately one-fifth of all global oil and gas shipments. Producers have had to stop production as their storage tanks fill up, and energy prices are now higher.

Dubai's main stock index fell 2.4%. Blue-chip developer Emaar Properties, which has fallen 4.7% in value, and top lender Emirates NBD have both declined 4.9%.

Air Arabia, however, ended the day 0.7% higher. Budget airline Air Arabia was poised to end a five-session slide, after losing more than 20% over the previous five trading days.

On Wednesday, two drones were shot down near Dubai's airport. Bahrain also evacuated aircraft as the attacks on Gulf infrastructure continued to disrupt air traffic.

Tens of thousands of flights have been cancelled, rerouted, and changed schedules as a result of the fighting. Drones and missiles are also threatening to shut down much of Middle East's airspace including Qatar.

In Abu Dhabi the index dropped 0.3%. Investors will continue to be highly sensitive to new headlines and regional development, and swings in oil price and logistical disruptions could continue to pose risk for certain markets, according to Daniel Takieddine.

Saudi Arabia's benchmark stock index rose 0.1% thanks to a rise of 1% in the oil major Saudi Aramco.

The oil prices rose on Wednesday, reflecting doubts about the International Energy Agency’s reported plan to release record amounts of oil reserves in order to mitigate possible war-related supply disruptions.

According to Ahmad Assiri of Pepperstone Research, the Saudi Market remains relatively stable. Supported by oil prices over $87 per barrel, and export flows through Yanbu, on the Red Sea, this puts the Saudi Market in a stronger position than its neighbors.

Saleh Abdulaziz al Rashed and Sons Company, a Saudi miner, surged by more than 14 percent. This was the first time the Gulf region had seen a market debut since the beginning of the war.

The Qatari Index fell 0.9%. This was due to a 2.1% drop in the Qatar National Bank. It is the Gulf's largest lender by assets.

Shell, TotalEnergies and some Asian companies, among others, who buy LNG from QatarEnergy as either portfolio players or offtakers, have declared force majeure.

Oman's index fell 0.5% elsewhere, but it is still up 31% on the year.

Assiri reported that the Muscat market experienced selective buying which allowed the index to break through resistance and remain above 7,700.

Kuwait's benchmark rose 0.5% and Bahrain's by 0.1%.

(Reporting by Ateeq Shariff in Bengaluru Editing by Tomasz Janowski) Reporting by Ateeq Sharif in Bengaluru Editing and proofreading by Tomaszjanowski

(source: Reuters)