Gulf stocks fall after Houthis claim Riyadh attacks

Saudi Arabia's stock market closed lower on Sunday after Yemen's Houthi rebels said they struck "sensitive" targets in the Saudi capital Riyadh with missiles and drones, rattling investor confidence across the Gulf region.

Flames and thick black smoke were seen near Riyadh's King Khalid International Airport on Saturday after authorities issued overnight alerts warning of potential danger around the city, according to Reuters. The attack marked the first time the Houthis had targeted the Saudi capital since renewed fighting in Yemen escalated as a front in the broader conflict following U.S. and Israeli strikes on Iran in late February.reuters+1

Market Fallout

The Tadawul All Share pared early losses to close 0.3% lower, dragged down by a 2.8% drop in ACWA Power. Oil major Saudi Aramco, which fell in early trade, managed to close 1.3% higher by the end of the session. Insurance, energy, and building and construction sectors led the declines, with falling stocks outnumbering advancing ones by 257 to 71.investing+1

The sell-off extended across the Gulf. Qatar's main index declined 1.1%, pressured by a 4.1% drop in petrochemical producer Industries Qatar. Kuwait's index dropped 0.7%, while Bahrain and Oman each fell 0.2% and 0.3%, respectively. Egypt's blue-chip index also eased 0.2%.reuters

Diplomatic Efforts in Focus

President Donald Trump has reportedly rejected Saudi requests for direct U.S. military intervention against the Houthis. Attention is now turning to Trump's planned meeting with Gulf Cooperation Council leaders on September 22 on the sidelines of the UN General Assembly in New York, where discussions are expected to focus on the next phase of the Iran conflict and a possible postwar strategy.reuters+2

"Any meaningful de-escalation signals could support investor confidence," said Daniel Takieddine, co-founder and CEO of Sky Links Capital Group.reuters

Meanwhile, China has privately urged Tehran to help restrain the Iran-aligned Houthis following a Saudi appeal to Beijing, according to three Iranian sources familiar with the discussions cited by Reuters. Iran on Sunday warned against any new escalation by the U.S. and its allies, saying it had information that such a move was being prepared.reuters