Most stock markets in the Gulf ended lower on Tuesday after stronger-than-expected U.S. retail sales reinforced the view the Federal Reserve may not rush to cut interest rates this year.
Data last week had already shown U.S. consumer prices increased more than expected in March as Americans paid more for gasoline and rental housing, leading financial markets to anticipate the Fed would delay cutting rates until September.
Most Gulf currencies are pegged to the dollar and any monetary policy change in the United States is usually mimicked by Saudi Arabia, the United Arab Emirates and Qatar.
Saudi Arabia's benchmark index (.TASI), opens new tab dropped 1.6%, with most of its constituents in negative territory, including Al Rajhi Bank (1120.SE), opens new tab, which was down 2.9%.
Among other losers, oil giant Saudi Aramco (2222.SE), opens new tab retreated 1.3%.
Investors remained cautious about Israel's response to a weekend drone and missile attack by Iran as international pressure for restraint grew amid fears of an escalation of conflict in the Middle East.
Dubai's main share index (.DFMGI), opens new tab lost 1.4%, dragged down by a 1.7% drop in top builder Emaar Properties (EMAR.DU), opens new tab.
The Dubai bourse breached the support level it had held for the past month, affected by both geopolitical tensions and heightened inflationary pressures in the United States. The market may continue its downward trajectory if these pressures persist, said Joseph Dahrieh, managing principal at Tickmill.
"However, the upcoming IPO of Spinneys could positively influence the overall market sentiment," he added.
Supermarket chain franchisee Spinneys announced plans for an initial public offering (IPO) on the Dubai bourse and said on Tuesday it planned to expand into Saudi Arabia this year.
In Abu Dhabi, the index (.FTFADGI), opens new tab eased 0.6%.
The Qatari benchmark (.QSI), opens new tab lost 0.7%, hit by a 1.2% fall in petrochemical maker Industries Qatar (IQCD.QA), opens new tab.
Oil prices, a catalyst for the Gulf's financial markets, dipped but remained near $90 a barrel as investors weighed up how supply from the Middle East might be affected should the geopolitical situation deteriorate further.
Outside the Gulf, Egypt's blue-chip index (.EGX30), opens new tab fell 0.7%, with Talaat Mostafa Holding (TMGH.CA), opens new tab losing 2.6%.
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