UAE Equities Climb to Three-Month Highs Amid Optimism Over Regional Diplomacy

UAE equity markets recorded their strongest weekly performance in months during the period ending June 19, driven by optimism surrounding a potential diplomatic breakthrough between the United States and Iran. However, despite the sharp rebound, both major UAE indices remain below their pre-conflict highs, highlighting the extent of the losses sustained during the regional crisis.

The Dubai Financial Market General Index (DFMGI) and the FTSE ADX General Index (FADGI) reached their highest closing levels in three months by mid-week after reports emerged that the United States and Iran had agreed on a memorandum of understanding aimed at ending the conflict, with a formal signing ceremony initially scheduled for June 19 in Switzerland.

Markets responded positively to the announcement. From the moment the agreement was revealed, the DFMGI gained approximately 9%, while the FADGI advanced around 6%.

To put the recovery into perspective, the DFMGI had fallen nearly 23% from its pre-conflict peak to its mid-March lows as regional hostilities escalated and trading was temporarily suspended in early March. Since then, the index has recovered approximately 18%, although it remains around 9% below its pre-conflict high.

The FADGI followed a similar trajectory, declining 13% from its pre-conflict peak before reaching its lows in mid-March. The index has since recovered approximately 8% but continues to trade around 7% below its pre-conflict high.

Commenting on the market's performance, Nagham Hassan, Market Analyst at eToro, said: "UAE markets have essentially been trading the headlines since the conflict began. However, the speed and scale of the recent rallies demonstrate that genuine investor appetite remains firmly in place. The recovery we've seen is meaningful, but both indices still have ground to recover before returning to their pre-conflict levels."

By June 18, sentiment remained constructive, with both indices trading near three-month highs ahead of the anticipated signing ceremony. However, market momentum weakened after the event failed to proceed as expected. On June 19, the DFMGI declined approximately 1.7%, while the FADGI fell around 1%.

Additional regional tensions over the weekend contributed to a more cautious tone when markets reopened on June 22. Both indices nevertheless finished the session in positive territory, with the DFMGI rising 0.32% and the FADGI gaining 0.19%, although investor conviction was notably more restrained.

Despite ongoing geopolitical uncertainty, underlying market fundamentals remain supportive. The Dubai Financial Market surpassed the AED 1 trillion market capitalisation milestone during the week, marking a significant achievement after experiencing substantial outflows earlier in the year.

According to DFM data, foreign investors accounted for 54% of total trading value during the first quarter of 2026, while 79% of new investor registrations originated from international markets. On the Abu Dhabi Securities Exchange, trading activity increased 22% year-on-year during the same period, with foreign investors representing 47.5% of total trading value. DFM's average daily trading value also rose 56% year-on-year.

"The data continues to point to strong international interest in UAE equities," Hassan added. "When positive developments emerge, UAE markets have shown they can respond decisively. The fundamentals are strong and foreign investor participation remains robust. What markets now require is greater certainty around the diplomatic process and a durable resolution that removes the uncertainty premium weighing on valuations."

While the DFMGI and FADGI remain approximately 9% and 7% below their pre-conflict highs respectively, investors will be closely monitoring geopolitical developments to determine whether the recent recovery can be sustained and eventually extended.