Gulf Stock Markets Drop Amid Global Trade War Fears from U.S. Tariffs

Regional Indices React to Economic Uncertainty and Company News

Rising concerns over a potential global trade war, sparked by new U.S. tariffs on imports from Mexico, Canada, and China, have sent ripples through Gulf stock markets, with most indices closing lower on Wednesday. The U.S. administration, led by President Donald Trump, rolled out a 25 percent tariff on goods from Mexico and Canada starting Tuesday, alongside additional duties on Chinese imports. This move prompted swift retaliatory tariffs from Canada and China on various U.S. products, while Mexico has promised to unveil its own countermeasures by Sunday. These developments have heightened economic uncertainty, particularly for oil dependent Gulf economies, where fears of disrupted global trade and fluctuating oil demand are weighing heavily on investor sentiment. Adding to the pressure, company specific updates, such as Saudi Aramco’s significant dividend reduction, have further influenced market performance across the region.

In Saudi Arabia, the benchmark stock index slipped by 0.3 percent, settling at 11,899, driven largely by a 1.3 percent decline in Saudi Aramco shares on the Tadawul exchange under ticker 2222. The oil giant’s drop came after it disclosed a decrease in annual profits and a major cut in dividend payouts, reducing them by almost a third to $85.4 billion for the year. Given that the Saudi government holds an 81.5 percent stake in Aramco, this reduction could shrink available funds for ambitious national projects, potentially widening the kingdom’s budget deficit. Analysts note that Saudi Arabia’s economy, heavily reliant on oil revenue, faces increased vulnerability when global trade tensions threaten energy markets. Despite some positive earnings reports, such as Dallah Healthcare Company announcing higher annual profits, its stock still slid, suggesting broader market pessimism overshadowed individual gains.

Dubai’s primary share index experienced a steeper fall, declining 0.8 percent to close at 5,313, with significant losses tied to a 3.7 percent drop in Emirates NBD, the emirate’s leading bank. This decline was attributed to the stock trading ex dividend, a common event where prices adjust downward after dividend eligibility ends. Other notable declines in Dubai included Emaar Properties, a major real estate developer, which lost 1.1 percent, and Salik, the toll operator, which dipped by 0.6 percent. These movements reflect how global trade war fears, combined with technical stock adjustments, can amplify downward pressure on Gulf financial markets. In Abu Dhabi, the index fell 0.4 percent to 9,557, with petrochemical giant Borouge plunging 6 percent following its merger announcement with Borealis. This deal aims to create the world’s fourth largest polyolefins producer by capacity, but investor skepticism about integration risks or valuation may have triggered the sharp sell off.

Bucking the regional trend, Qatar’s stock index rose by 0.2 percent to 10,492, supported by a 2.1 percent increase in Qatar Gas Transport shares. Often referred to as Nakilat, this company benefits from Qatar’s position as a global leader in liquefied natural gas exports, which may insulate it from oil focused trade disruptions. Qatar’s economy, less dependent on crude oil compared to its neighbors, could explain this resilience amid the tariff turmoil. Similarly, Egypt’s blue chip index climbed 0.4 percent to 30,876, bolstered by a 1.6 percent gain in Commercial International Bank. As a non Gulf market, Egypt’s performance suggests that domestic banking strength or reduced exposure to oil market volatility may have shielded it from the broader regional downturn.

Elsewhere in the Gulf, Bahrain’s index edged down by 0.2 percent to 1,976, Oman’s remained unchanged at 4,411, and Kuwait’s dropped 0.5 percent to 8,719, illustrating a mixed but predominantly cautious response to the unfolding trade war narrative. The U.S. tariffs on Canada and Mexico, key oil suppliers, could theoretically push oil prices higher by constraining supply, yet Gulf markets appear more focused on the risk of a global economic slowdown reducing energy demand. Historical data from sources like the International Energy Agency’s oil market reports suggest that trade disputes often lead to volatile oil price forecasts, with 2025 demand growth projected at a modest 1.1 million barrels per day. This uncertainty likely underpins the bearish mood in most Gulf stock markets.

Delving deeper into the economic implications, Saudi Aramco’s dividend cut stands out as a pivotal factor for Saudi Arabia’s financial outlook. The kingdom has been channeling oil revenues into mega projects like NEOM and Vision 2030 initiatives, but a $85.4 billion dividend haul, down significantly from prior years, could force a reassessment of spending plans. Investors may be pricing in this fiscal strain, especially as global trade war fears compound the pressure on oil prices. In contrast, Qatar’s gains highlight the advantage of diversification, with its natural gas focus offering a buffer against oil centric shocks. Abu Dhabi’s Borouge merger, while ambitious, introduces short term uncertainty, as mergers often face execution challenges that spook shareholders.

For those tracking Gulf stock market trends, these movements underscore the region’s sensitivity to both global economic shifts and local corporate developments. The interplay of U.S. tariff policies, retaliatory measures from major economies, and company specific news like dividend cuts or mergers creates a complex landscape for investors. While Qatar and Egypt show pockets of strength, the prevailing sentiment across Saudi Arabia, Dubai, and Abu Dhabi reflects a cautious stance. Looking ahead, market watchers will likely keep a close eye on Mexico’s tariff response, due Sunday, and any further escalation between the U.S., Canada, and China. These factors will shape whether Gulf indices stabilize or face continued volatility in the near term, with oil prices and global trade dynamics remaining critical variables for this energy rich region.