Houthi attacks targeted Saudi Red Sea oil facilities, triggering early volatility across Gulf markets before prices and indices pulled back.
The Saudi Tadawul All Share Index opened down 0.8 percent and closed flat. Dubai's Financial Market General Index ended the session up 0.1 percent. Both markets recovered as investors concluded the damage was contained.
Brent crude surged 2.3 percent in overnight trading on supply disruption fears, then retreated sharply. By midday, Brent traded at $84.50 a barrel, up just 0.4 percent. The rapid pullback kept global inflation expectations in check after a brief spike across commodity markets.
The muted oil move contained any flight to safety in fixed income. U.S. Treasury yields dipped on initial risk-off sentiment, then reversed. The 10-year yield settled at 4.32 percent, unchanged from its open, as traders concluded the strikes posed limited risk to global shipping routes and energy supply. Corporate bond spreads held steady.
Duration risk was the central concern for bond investors during the session. A sustained oil surge would have pressured the Federal Reserve toward a harder line, steepening the yield curve. With crude retreating, that pressure eased, leaving the Fed's gradual policy path intact.
The calm in Gulf markets limited spillover into major global equity indices. The S&P 500 traded flat while the Nasdaq fell 0.6 percent, moves analysts attributed to tech sector dynamics rather than geopolitical risk. Investors will monitor official statements from Riyadh on the extent of the damage and any retaliatory measures, alongside weekly U.S. crude inventory data due Wednesday.
