Dubai climbs as Gulf jitters ease

UAE equities closed higher on Friday, extending a second straight week of gains as traders responded to signs that Washington and Tehran may keep diplomatic channels open, lifting sentiment across Gulf markets and pushing Dubai to its highest level in about six weeks. Dubai outpaced Abu Dhabi, with buying concentrated in banking and property names as investors weighed the prospect of lower geopolitical risk around the Strait of Hormuz and the wider region.

Dubai’s main share index rose 1 per cent on the day and recorded a weekly advance of 4.8 per cent, its strongest weekly performance in more than nine months. Abu Dhabi’s benchmark added a marginal 0.03 per cent and ended the week up 0.8 per cent. The relative gap between the two exchanges reflected stronger momentum in Dubai’s cyclical counters, particularly lenders and developers that tend to benefit when investor appetite for risk improves and concerns over trade disruption begin to ease.

Among Dubai’s most actively watched stocks, Emirates NBD gained 2 per cent and Emaar Properties rose 1.1 per cent, helping drive the market higher. In Abu Dhabi, First Abu Dhabi Bank climbed 1.6 per cent while Aldar Properties advanced 0.5 per cent after the developer said it had delivered 9,000 rental homes worth 2.8 billion dirhams. Abu Dhabi’s gains were restrained by declines in International Holding Company, down 0.5 per cent, and Abu Dhabi Commercial Bank, which slipped 0.6 per cent.

The market move came as investors tracked another burst of statements from Washington and Tehran that suggested diplomacy had not collapsed despite sharp differences over nuclear issues and the broader terms of any ceasefire arrangement. Reuters reported that substantial disagreements remained between the two sides, yet both capitals were still discussing a possible framework that could keep the Strait of Hormuz open and create room for further talks. For Gulf investors, that distinction matters. Even limited progress can reduce the risk premium attached to shipping, energy exports and regional assets.

President Donald Trump said in remarks to Reuters that the United States was optimistic a deal with Iran could be reached, although Iranian officials publicly pushed back on some of his assertions, especially over the handling of enriched uranium. The mixed messaging did not erase doubts, but it was enough to feed a relief trade in Gulf equities after weeks in which energy infrastructure, maritime traffic and military escalation had all weighed on confidence. Markets were not pricing in a full settlement; they were reacting to the reduced likelihood of an immediate deterioration.

That shift in tone has broader implications for the UAE, whose financial markets remain closely tied to regional stability, trade flows and capital mobility. Dubai is particularly sensitive to swings in investor confidence because of its heavier exposure to property, banking, tourism and consumer sectors. Abu Dhabi, with a larger weighting toward heavyweight conglomerates and energy-linked names, can sometimes trade more defensively. This week’s outperformance by Dubai suggested that investors were leaning back into growth-oriented shares as the political backdrop appeared marginally less threatening.

Oil prices also played a role. Brent crude remained below $100 a barrel, according to Reuters market coverage cited in the regional equities report, easing concern that a prolonged supply shock would intensify inflationary pressure and squeeze business activity across importing and consuming segments of Gulf economies. For the UAE, where equity performance often reflects a balance between hydrocarbon wealth and non-oil expansion, a more stable oil market can be supportive when it signals resilience rather than crisis.

Still, the rally sits alongside clear unresolved risks. Shipping disruption around Iran has not fully disappeared, and Reuters reported this week that sanctioned supertankers had entered Gulf waters despite the broader blockade environment, underlining how fragile maritime conditions remain. At the same time, US officials have continued to issue military warnings tied to the ceasefire timetable, reminding investors that the diplomatic opening could narrow quickly if negotiations break down.