Stocks in the Middle East poised to rise before earnings’ announcements; Dubai retreats slightly from its 17-year peak
The Middle East stock markets saw a mixed performance on Thursday, with some indices gaining and others retreating. The overall sentiment remains cautiously optimistic, as earnings expectations in the energy sector show resilience amid macroeconomic and geopolitical challenges, while the environment of higher U.S. Federal Reserve interest rates is damping liquidity and borrowing activity in the region.
In Qatar, Ooredoo surged 5.2% to touch a nearly 11-year peak, and the Qatar stock index rose 1% to 11,262 riyals. The telecommunications company held its full-year outlook steady, posting upbeat second-quarter earnings. Meanwhile, Qatar Islamic Bank led the rally, gaining over 3%.
Saudi Arabia's benchmark index gained 0.1%, with Saudi National Bank, the kingdom's biggest lender by assets, advancing 1.5%. Top lender First Abu Dhabi Bank in the UAE advanced 1.7%.
However, investor enthusiasm is ahead of major earnings announcements from chemical company SABIC and oil giant Aramco in the coming week. Despite this, the anticipation of strong blue-chip earnings offset signals that U.S. interest rates may remain high.
Egypt's blue-chip index jumped 1%, with Talaat Moustafa Group Holding leading the gain in the blue-chip index with a 1.5% increase.
Dubai's main share index retreated due to profit-taking, snapping six straight sessions of gains. All sectors in Dubai closed in the red, with Blue-chip developer Emaar Properties leading the declines with a 1.3% decline.
Investor sentiment in the Middle East has been affected by the Federal Reserve's lack of clear guidance on when it might lower borrowing costs. The sustained high interest rates, which are effectively mirrored by pegged Gulf currencies, are exerting downward pressure on liquidity and borrowing in the Gulf markets. This tighter monetary environment presents challenges for market liquidity and credit availability, which could temper stock market gains despite earnings support from the energy sector.
Despite these challenges, the current outlook for Gulf Cooperation Council (GCC) stock markets in 2025 is cautiously optimistic. Fiscal vulnerabilities such as Saudi Arabia's widening budget deficit and rising debt-to-GDP ratio pose risks, but earnings expectations in the energy sector show resilience. IPO activity in the GCC remains resilient, with 27 deals raising $4.1 billion in H1 2025, reflecting ongoing investor interest particularly in real estate-related sectors. Inflation in the Gulf remains relatively stable and moderate, supporting steady economic growth.
In summary, GCC stock markets are positioned for moderate growth supported by strong energy sector earnings and stable economic fundamentals, but tempered by fiscal vulnerabilities, tariff pressures, and a tight U.S. interest rate environment. Investors should balance these dynamics, focusing on sectors and companies demonstrating operational resilience amid ongoing macroeconomic and geopolitical uncertainties.
[1] GCC earnings expectations: [source] [2] IPO activity in the GCC: [source] [3] Inflation in the Gulf: [source] [4] U.S. Federal Reserve impact: [source]
- Expectations for earnings in the energy sector across the Gulf Cooperation Council (GCC) remain resilient, despite macroeconomic and geopolitical challenges, offering a positive sentiment for investors focused on resilient sectors. [Source]
- Dividend gains from stocks like Ooredoo in Qatar, Saudi National Bank in Saudi Arabia, and Qatar Islamic Bank have been a boon for investors, while Qatar's stock index and the telecommunications company held steady outlooks. [Source info not provided]
- Despite the rally, many investors are exercising caution ahead of major earnings announcements from SABIC and Aramco in the coming week, balancing this with the anticipation of strong blue-chip earnings that may offset high U.S. interest rates.
- IPO activity in the GCC has remained robust, with 27 deals raising $4.1 billion in H1 2025, especially in real estate-related sectors, reflecting ongoing investor interest. [Source]
- The tighter monetary environment caused by sustained high U.S. interest rates, as well as fiscal vulnerabilities like Saudi Arabia's widening budget deficit and its rising debt-to-GDP ratio, represent challenges for market liquidity and credit availability in the Gulf, potentially affecting stock market gains. [Source]
