Dubai and Abu Dhabi Indices Falter Under Pressure from Hormuz Crisis Despite Partial Recovery

The Dubai Financial Market General Index ended Thursday's trading at 5,839.53 points, down slightly by 0.04%, while the Abu Dhabi General Index fell 0.71% to 10,004 points, in a session reflecting clear investor caution.

The annual picture clearly dominates market sentiment; the Dubai index registered a loss of 4.70% on a year-on-year basis, while the Abu Dhabi index declined by 2%, mainly attributed to the repercussions of the Strait of Hormuz crisis that hit risk appetite in regional markets.

In June 2025, the Dubai index witnessed a sharp increase during what was known as a relief rally following hopes of a ceasefire with Iran before recovering to higher levels, indicating a recovery path that remains fragile.

Analysts believe the UAE indices are trading at valuations that do not yet reflect a full restoration of confidence by foreign investors. While optimists estimate that the Abu Dhabi index reaching its quarter-end target at 9,926 points indicates cohesive upward momentum, skeptics argue that sustainable geopolitical stability remains the primary condition for foreign investment to return with sufficient weight to both markets.

What do these terms mean?

Relief Rally: A sudden rise in stock prices occurring after negative concerns weighing on the market dissipate, such as hopes for a truce or improved geopolitical news.

Risk Appetite: The extent to which investors are willing to accept higher risks in exchange for greater returns, which declines during times of geopolitical and economic crises.

Quarter-End Target: A price level set by analysts as a projection for index performance by the end of the quarter, used as a reference to evaluate short-term market performance.