Mideast Stocks: UAE stocks rally on US-Iran ceasefire optimism; Fed worries cap Gulf gains

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Stock markets in the United Arab Emirates climbed on Thursday, led by sharp gains in Dubai, as optimism ⁠over an interim ceasefire agreement between the United States and Iran boosted risk appetite, although expectations of ‌a more hawkish Federal Reserve capped broader gains across the Gulf.

U.S. President Donald Trump and his Iranian counterpart signed an accord on Wednesday aimed at ending the war, with Trump warning that Washington would resume attacks and target Iranian officials if Tehran failed to honour its commitments. "While the process remains on track, investors could remain cautious as the two countries move to the next steps in negotiations," said Milad Azar, market analyst at XTB MENA.

"In ⁠the meantime, the reopening of the Strait of Hormuz could help ease concerns and improve operating conditions for several sectors, and the region could see a gradual increase in energy exports and trade flows, helping boost local economies," he added.

Meanwhile, investors priced in the likelihood of further Federal Reserve rate hikes after Warsh underscored the need to curb inflation and ‌other policymakers signalled ⁠higher borrowing costs ahead. Gulf ⁠markets tend to track shifts in U.S. monetary policy expectations as most regional currencies are pegged to the dollar.

Dubai's main index climbed 2.5% to 6,270, its highest level since the U.S.-Israeli war on ‌Iran began in late February. Blue-chip developer Emaar Properties gained 2.4%, while ⁠Emirates NBD Bank surged 7.2%.

ENBD, Dubai's largest lender, said it had completed the acquisition of a majority stake in India's RBL Bank through a primary infusion of about $2.75 billion. Abu Dhabi's benchmark index advanced 1.2%, with real estate and healthcare stocks leading the rally.

First Abu Dhabi Bank , the UAE's largest lender, rose 3.5%, while real estate developer Aldar Properties jumped 6% to a more than three-month high of 9 dirhams per share. Saudi Arabia's benchmark stock index inched up 0.1%, helped by gains in real estate, materials and healthcare stocks. Saudi Arabian Mining Co , also known as Ma'aden, rose 3.1%, while Saudi National Bank , the kingdom's largest lender by ‌assets, added 1.5%. Saudi Aramco fell 0.3%, paring earlier losses, after Chairman Yasir Al-Rumayyan ⁠said the oil giant was considering expanding its storage capacity around the world after energy supplies through the Strait of Hormuz were disrupted by the Iran war. The Qatari benchmark index eased 0.6%, with most stocks trading lower. Industries Qatar slipped 1.5%, while Qatar National Bank, the region's largest lender, shed 0.4%.