Gulf stocks slide, Kuwait suspends trading as Iran responds to US, Israeli attacks

Most Gulf equities fell on Sunday and Boursa Kuwait suspending trading after US and Israeli strikes on Iran prompted retaliatory attacks across nearby ⁠US targets in Gulf cities, fanning fears of prolonged regional instability.

Witnesses reported ‌blasts in the Dubai area and ​over Doha for a second day on Sunday, as Iran's retaliation for US-Israeli strikes that killed Iranian leader Ayatollah Ali Khamenei forced major regional airports including Dubai to shut, in one of the biggest disruptions to global aviation in years. 

Trading in Middle East markets is an early indicator ​of how investors measure any impact ⁠on assets from oil to safe-haven currencies and gold. Analysts at Barclays raised their Brent crude forecast to about $100 a barrel on Saturday from an earlier estimate of $80.

In a rare move, Boursa Kuwait suspended trade until further notice citing the "exceptional circumstances" the country is facing.

In ⁠Saudi Arabia, ‌the region's biggest stock market, the benchmark index pared its losses to trade 2 per cent lower compared with a 4.6 per cent drop early in the session.

Decliners included ‌Al Rajhi Bank at 2.8 per cent, Saudi National Bank at 4.3 per cent and budget airline flynas at 5.8 per cent.

Oil behemoth Saudi Aramco ⁠advanced 2.6 per cent amid expectations of rising oil prices. The kingdom on Saturday said Iran had attacked Riyadh and the country's eastern region.

"GCC markets ‌are likely to remain under pressure as investors price in a higher ‌and potentially prolonged geopolitical risk premium following the recent escalation in the region," said ‌Tahir Abbas, head of research at Oman's Ubhar Capital.

"While higher oil prices provide a ‌near-term fiscal cushion for regional governments, the more material concern is the risk of affected shipping routes, particularly through the Strait of Hormuz, which would have broader implications for energy flows and trade."

Gulf stock markets face ⁠heightened correction risk ⁠and volatility as geopolitical tension drives a risk-off mood, pressuring prices and expectations, said XTB MENA Senior Market Analyst Hani Abuagla.

Investors will track regional developments and any further escalation or real-economy damage could deepen the selloff, he said.

The Muscat stock index trimmed its decline to 1.8 per cent after sliding more than 3 per cent in a broad-based selloff, with heavyweight OQ Base Industries falling 1.3 per cent.

Bahrain's stock index was down 0.9 per cent and Qatar's stock exchange was closed for a bank holiday.

Outside ​the Gulf, Egypt’s blue-chip index slumped 5.5 per cent in early trade with all of its ​constituents in the red.

Disruption to ​shipping traffic through the Strait of Hormuz also remains a key risk, weighing on sentiment and disrupting normal operations across a ​range of sectors, Abuagla said.