GCC Equities Gain as Ceasefire and Fed Hopes Boost Confidence

Arabian Post

15 hours ago

Gulf Cooperation Council stock markets rallied in June, with the S&P GCC Composite Index climbing 3 % on easing Middle Eastern tensions and growing expectations of US interest rate cuts. Investor sentiment strengthened across the region, led by notable gains in Kuwait and Dubai.
Kuwait's All Share Index recorded a 4.2 % rise in June, lifting its year‑to‑date performance to 14.8 %. The consumer‑staples and real‑estate sectors led the charge, posting increases of 9.1 % and 7.7 % respectively. The banking sector was also buoyant: Kuwait International Bank gained 15.9 % while Burgan Bank rose 8.7 %, following substantial share acquisitions by insiders. Warba Bank and Gulf Bank climbed 8.5 % and 7.2 %, respectively, as merger talks gained traction.
Dubai's equity market rose approximately 4.1 % over the month. Dubai Islamic Bank and toll operations firm Salik were strong performers, with the former up 4.9 % and the latter rising 2.2 % when the UAE market hit a 17‑year high. Abu Dhabi's index also gained, with Islamic Bank and Aldar Properties climbing 12.1 % and 7.3 %, respectively.
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Saudi Arabia's Tadawul index rose 1.6 % during the month. Al Rajhi Bank and Riyad Bank were key contributors, and the International Monetary Fund upgraded Saudi's GDP growth forecast to 3.5 % for 2025, citing robust demand for government-led projects. Qatar's index increased by around 0.8 %, driven by a 1.2 % rise in Qatar National Bank.
Markets surged as a ceasefire between Israel and Iran reduced regional geopolitical risk. Most GCC benchmarks reverted to pre-conflict levels by the end of June, while oil prices remained steady following the truce. Dubai's index in particular reached a 17‑year high on the back of this stability.
Buoyant global trends added further support. The prospect of US rate cuts, raised amid dovish signals from Federal Reserve policymakers and cooling inflation indicators, boosted risk appetite in emerging markets. Wall Street's S&P 500 neared record highs during the same period, underpinning regional investor confidence.
Sector rotation within the Gulf saw strong performances. Kuwaiti consumer staples and real estate led regional returns, while in Saudi, banking stocks remained upward, supported by IMF optimism. UAE financials and tolls also flourished as global capital flowed into yield-bearing assets.
However, oil market dynamics and monetary policy divergence posed selective risks. Although crude prices rebounded, volatility remains a factor for oil-linked economies. Meanwhile, divergence between global central banks—especially between the US Fed and ECB—has put pressure on regional currency pegs, influencing capital flows.
Investor strategies appear focused on defensive yet yield-enhancing sectors amid cautious optimism. Data from Markaz, Kuwait's financial centre, shows strong interest across consumer staples, real estate, and banking, with insider share acquisitions reinforcing positive trader sentiment.
Emerging trend analysis suggests GCC markets are increasingly appealing as geopolitical risk diminishes and global liquidity tilts toward accommodative central bank policy. The IMF's upgraded growth forecasts, particularly in Saudi, and policy divergence supporting higher yields in the Gulf, are luring foreign capital.
Looking ahead, attention will turn to sustainability of the ceasefire, future Fed decisions on policy easing, and crude price movements. GCC markets remain sensitive to developments in US monetary policy and Middle Eastern stability, with any deterioration potentially reversing the current momentum.