Gulf markets closed mixed as investors focused on earnings and Trump’s renewed tariff threats

The Gulf markets went separate ways on Sunday as traders tried to make sense of two incoming punches: Q2 earnings reports and a new wave of trade threats coming straight from the White House.

Donald Trump wants to slap at least 15% to 20% tariffs on anything coming out of the European Union, and if that’s not enough, his team is also reportedly considering reciprocal tariffs above 10%, even if they end up signing a deal.

In Saudi Arabia, stocks opened strong but didn’t hold up. The Tadawul index dropped 0.4%, pushing its losing streak to nine consecutive sessions, the longest in nearly two years. The dip wasn’t led by one name. It was broad; banks, mining, retail, all in the red.

Saudi National Bank, the kingdom’s largest lender, dipped 0.8%. Saudi Arabian Mining Company lost 1.3% after announcing the voluntary retirement of its chief financial officer. But the worst hit was Fawaz AbdulAziz Al Hokair & Co., a retail and real estate firm that crashed 10%.

The company had just closed a deal to sell 49.95% of itself to Al Futtaim Retail, an Emirati group, for 2.5 billion riyals, about $666 million. Investors didn’t like that, and the stock got dumped fast.

Qatar inches up as Egypt breaks records with IMF boost

Qatar went the other way. Its main stock index rose 0.2%, powered by a 1.2% gain in Industries Qatar, a petrochemical giant. That modest climb brought the market closer to a two-year high, and the mood stayed steady thanks to strength in the chemical sector. Unlike Saudi Arabia, Qatar didn’t have any major corporate shake-ups or bad news dragging it down.

Things were even more upbeat in Egypt, where the EGX30 index climbed 0.7% and hit a record high. That came as most sectors rallied on growing optimism around Egypt’s stalled $8 billion IMF deal.

Finance Minister Ahmed Kouchouk told reporters Wednesday that he was “confident” Egypt would meet its reform milestones and wrap up the delayed review by September or October. 

At the same time, Bonyan Development and Trade launched an IPO that was oversubscribed over 33 times, which sent another wave of buying across the board. 

And if that wasn’t enough, Bloomberg reported that Egypt plans to raise $4 billion through international bonds over the next year. Reuters couldn’t confirm the bond plan, but markets ran with it anyway.

ECB holds steady as banks prep earnings and Trump looms

In Europe, the focus is on whether banks can carry the earnings momentum. Citi called Q1 “remarkably resilient,” and now analysts expect Stoxx 600 EPS to finally turn positive on a yearly basis.

The weight is falling mostly on banks, because luxury, auto, and energy stocks have been seeing downward revisions. Unicredit will post results on Wednesday. The Italian lender has been in the headlines after upping its stake in Commerzbank to 20%, but also hitting a wall in its push to buy Banco BPM.

A court blocked the deal, demanding more clarity before allowing it to proceed. Still, Unicredit’s stock is up more than 50% this year, which is giving CEO Andrea Orcel some breathing room.

Over at the European Central Bank, President Christine Lagarde is expected to hold interest rates at 2% during Thursday’s meeting. Five ECB policymakers told Reuters that the meeting won’t be derailed by Trump’s latest trade threats. But there’s a warning. If the U.S. actually pushes ahead with a 30% tariff on EU imports, it’s widely expected that the ECB will be forced to cut rates.

Markets have until September 11 to measure the fallout. After this week’s session, the ECB takes its summer break.

One more warning came from Deutsche Bank, whose macro strategist told CNBC’s Squawk Box Europe that inflation risks in Europe are being ignored. He said there’s “a remarkable complacency across key assets,” and that traders aren’t factoring in the full impact of Trump’s tariffs yet. With the August 1 deadline looming for U.S.-EU talks, he warned that if things fall apart last minute, the result could be a very sharp market reaction.

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