UAE shares split as war risk builds

UAE equities ended Friday on a divided note as investors weighed the prospect of a wider Middle East conflict after U. S. President Donald Trump signalled that Washington could intensify attacks on Iranian infrastructure, a message that added to concern over energy supplies, shipping routes and regional risk appetite. Dubai’s main index fell, while Abu Dhabi’s benchmark edged higher, reflecting a market torn between fear-driven selling and selective buying in banking and energy-linked names.

Dubai’s benchmark closed down 0.5 per cent, pressured by a 4.9 per cent slide in Emaar Properties and losses in Emaar Development. Emirates NBD also slipped 0.4 per cent even after receiving regulatory approval from the Reserve Bank of India to acquire a majority stake in Mumbai-based RBL Bank. Abu Dhabi, by contrast, rose 0.2 per cent, helped by gains in Abu Dhabi Islamic Bank and petrochemicals producer Borouge. The uneven finish captured the different forces driving Gulf markets: property and consumer-facing names came under pressure, while some lenders and hydrocarbon-linked counters found support.

The immediate catalyst was Trump’s social media warning that the U. S. military “hasn’t even started destroying what’s left in Iran”, adding that bridges and then electric power plants could be next. That message followed U. S. strikes on a bridge near Tehran that Washington said had been used to disrupt military resupply routes, though the target also carried commercial and civilian traffic, deepening international scrutiny over the legality and strategic wisdom of hitting infrastructure with broad public use.

For investors in the Emirates, the concern is not limited to the battlefield. The broader issue is whether the conflict spills further into the Gulf’s economic arteries. Oil prices surged sharply on Friday, with Brent crude rising to about $109 a barrel as traders priced in the risk of prolonged supply disruption. That kind of move can support revenues, government finances and sentiment around energy producers, but it also sharpens anxiety over inflation, transport costs, insurance premiums and the operating environment for sectors tied to tourism, construction, logistics and discretionary spending.

Those tensions have become more acute because the conflict is no longer being viewed as a contained exchange of threats. Reports of damage to infrastructure in Kuwait, alongside continued alarm over the Strait of Hormuz, have reinforced the sense that financial markets in the Gulf must now price not only headline risk but the possibility of direct disruption to critical assets. The waterway remains central to the global movement of crude and liquefied natural gas, so each escalation reverberates quickly through equity, currency and commodity markets.

That helps explain why Abu Dhabi proved more resilient than Dubai. Abu Dhabi’s market has a heavier weighting in banks, energy and defensive large-cap names that can appear more sheltered during geopolitical stress, especially when oil is rising. Dubai, while also home to major financial institutions, is more exposed to property, retail, hospitality and broader sentiment around regional business confidence. A sell-off in Emaar, one of the exchange’s bellwether stocks, therefore carried symbolic as well as numerical weight, underscoring how quickly geopolitical fear can filter into valuations tied to domestic growth and international investor confidence.

Market participants are also watching whether the region’s policymakers move to cushion the impact if volatility persists. Gulf governments have deep financial buffers, proven records of intervention during shocks and strong incentives to preserve domestic stability. Yet the present challenge is more complex than a routine correction because it combines war risk, elevated oil, uncertainty over U. S. strategy and questions about the durability of maritime trade flows. Investors who might ordinarily welcome stronger crude prices are being forced to ask whether the geopolitical premium now outweighs the macroeconomic upside.

Another layer of uncertainty comes from the mixed messaging around the future course of the war. Earlier in the week, markets had responded to reports that Trump was weighing a path towards ending hostilities, only for Friday’s rhetoric to swing sharply back towards escalation. That has made day-to-day positioning more fragile across Gulf bourses, where sentiment is increasingly being set by military and diplomatic headlines rather than company fundamentals alone.