Lower geopolitical risk premiums and evolving energy dynamics following the US-Iran interim deal are expected to support investor sentiment in the UAE and wider Middle East, according to Standard Chartered.

“UAE investors are entering the second half of 2026 from a position of strength. The region continues to benefit from supportive liquidity conditions and the stabilisation of oil markets,” said Ayesha Abbas, Managing Director and Head of Affluent and Wealth Solutions, Europe, Middle East and Africa, and UAE at Standard Chartered.

She said the bank is seeing strong demand for diversified portfolios that balance growth opportunities in global equities, with income strategies such as Emerging Market USD bonds, alongside gold, as a strategic hedge.  

For internationally minded clients in the UAE, staying invested and well-diversified will be key to capturing opportunities as markets evolve, Abbas said.

Global equities rose more than 12% year-to-date, supported by strong earnings and artificial intelligence driven optimism, despite geopolitical tensions, higher oil prices and elevated bond yields, according to Standard Chartered’s ‘Global Market Outlook’ report for the second half of 2026.

While this momentum is expected to extend into the second half of the year, investors will need to be more nimble as markets adjust to four key pivot points: energy prices, equity supply, investor positioning and central bank policy.  

Oil market developments remain particularly relevant in the Middle East, including the UAE, the bank said.

The report said the US-Iran interim deal and oil price retreat have reduced the acute geopolitical risk premium and created a more supportive backdrop for risk assets.

This will help investors refocus on growth opportunities, especially in markets and sectors that benefit from lower energy costs, easing inflationary pressures, and supporting resilient earnings momentum.

However, the pace of recovery in physical flows and inventory rebuilding is likely to keep energy prices from immediately returning to start-of-year levels, a key factor shaping inflation expectations and investment opportunities, the report said.

(Editing by Bindu Rai, bindu.rai@lseg.com)