Markaz: Kuwait equities extended their rally after de-escalation of geopolitical and trade tensions towards the end of the month
The S&P GCC Composite index gained 3.0% in June 2025. Saudi equity index gained by 1.6% during the month, amid broad-based gains. Saudi Aramco declined by 2.7% during the month, pressured by decline in oil prices in latter part of the month. Abu Dhabi's equity index increased by 2.8% in June 2025, supported by gains in blue-chips. Abu Dhabi Islamic Bank (ADIB) and Aldar Properties gained 12.1% and 7.3% respectively for the month. Dubai's equity index gained 4.1% for the month, supported by gains in blue chips. Dubai Islamic Bank (DIB) and Salik Company gained by 9.9% and 5.8% respectively for the month. Salik Company's strong 2024 performance supported its share price in June. Qatar's equity markets gained 2.7% for the month, supported by gains in natural gas prices.
Saudi Arabia's GDP for Q1 2025 grew by 3.4% y/y, higher than the 2.7% y/y growth reported earlier in its flash estimates, on account of smaller annual decline from the oil sector and stronger private sector growth. Fitch has affirmed UAE's AA rating with a stable outlook, citing robust financial buffers despite regional risks and hydrocarbon dependence. UAE's central bank has lowered its 2025 GDP growth forecast for the country to 4.4% y/y, down from earlier estimate of 4.7% y/y, citing lower oil prices, slowdown in global economic activity and increased uncertainty.
Global markets were positive during June 2025, supported by de-escalation of geopolitical tensions in the Middle East, progress on trade deal between U.S and China and dovish comments from U.S Fed. The MSCI World and S&P 500 indices rose by 4.2% and 5.0% respectively for the month. According to U.S-China deal, U.S. would charge a 55% tariff on imported Chinese goods while China would charge a 10% tariff on U.S. imports. U.S has also agreed to allow Chinese students to study in its universities, while China would remove export restrictions on rare earths. The MSCI EM index gained 5.7% during the month. Chinese equities rose by 2.9%, supported by reports on U.S-China trade deal. South Korean and Taiwan equities gained 13.9% and 4.3%, respectively, supported by election results (South Korea) and positive trade talks with US (Taiwan)
The U.S inflation stood at 2.4% y/y in May 2025, slightly up from the 2.3% y/y reading in April 2025. While inflation numbers are being closely followed, they are yet to show significant impact from the tariffs. The U.S labor market added 139,000 jobs in May, down from 147,000 jobs added in April, indicating emerging weakness amid policy uncertainty.
The yield on the 10-year US treasury notes declined 17 bps during the month to 4.24%. U.S Fed held rates steady at 4.25%-4.5% in June 2025, citing persisting risk of inflation. The central bank maintained its expectation of 50-bps rate cuts for 2025, but lowered rate expectation for 2026 and 2027 by 25 bps each to a target rate of 3.50%-3.75% and 3.25%-3.50%, respectively. U.S Fed has also lowered its economic growth expectations for 2025 to 1.4% y/y, from 1.7% y/y estimated in March 2025.
Oil (Brent) prices closed the month at USD 67.6 per barrel, rising by 5.8% during the month. The commodity was volatile during June amid geopolitical tensions in the Middle East and U.S-China trade talks, closing at USD 78.85 per barrel on 19th June 2025, its highest close price in five months. However, in the latter part of the month, easing of tensions, expectations of further output hike by OPEC+ in its July meeting and progress in U.S-China trade deal pressured prices. OPEC+ is expected to further increase its output by 411,000 bpd from August 2025. Gold prices closed at USD 3,303, marginally up by 0.4% for the month.
Further developments on geopolitical tensions and trade talks would be closely watched by the markets. With the U.S President's tariff pause ending on July 09, 2025, finer details on tariff implementation and their impact on the economy and inflation would impact markets. Given the minimal expected impact from U.S tariffs on GCC, impact of tariffs on oil demand, continued unwinding of production cuts and performance of non-oil economy would be key market determinants for GCC equities.
About Kuwait Financial Centre 'Markaz'
Established in 1974, Kuwait Financial Centre K.P.S.C 'Markaz' is one of the leading asset management and investment banking institutions in the MENA region with total assets under management of over KD 1.44 billion (USD 4.67 billion) as of 31 March 2025. Markaz was listed on the Boursa Kuwait in 1997. Over the years, Markaz has pioneered innovation through the creation of new investment channels. These channels enjoy unique characteristics and helped Markaz widen investors' horizons. Examples include Mumtaz (the first domestic mutual fund), MREF (the first real estate investment fund in Kuwait), Forsa Financial Fund (the first options market maker in the GCC since 2005), and the GCC Momentum Fund (the first passive fund of its kind in Kuwait and across GCC that follows the momentum methodology), all conceptualized, established, and managed by Markaz.
For further information, please contact:
Sondos Saad
Corporate Communications Department
Kuwait Financial Centre K.P.S.C. "Markaz"
Email: Ssaad@markaz.com
markaz.com
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