Market Watch: Week Ahead Analysis

I. Executive Summary: Navigating Global and Middle East Markets

The past week in global financial markets concluded with a notable upward trajectory, particularly within the tech-heavy NASDAQ, which achieved new all-time highs. This strong performance was largely underpinned by robust economic data emerging from the United States and a discernible de-escalation of geopolitical tensions in the Middle East. Concurrently, the Middle East markets, including the Abu Dhabi Securities Exchange (ADX), Dubai Financial Market (DFM), and Tadawul, demonstrated commendable resilience, extending the positive momentum observed throughout June. A significant theme across these markets was the continued influence of Artificial Intelligence (AI)-related stocks, which served as powerful drivers of performance, especially within NASDAQ, reflecting strong underlying fundamentals and promising future growth prospects for these companies.

Looking ahead, the upcoming week is anticipated to be shaped by several critical economic events. Foremost among these are the minutes from the US Federal Open Market Committee (FOMC) meeting, which are expected to offer deeper clarity into the Federal Reserve's monetary policy stance and potential future adjustments. While the second-quarter earnings season is just commencing, a few major company earnings reports are scheduled, providing early indicators of corporate health and sector-specific trends. Investors will also remain attentive to evolving global trade dynamics and ongoing regional developments, particularly within the Middle East, as these factors continue to influence market sentiment and investment flows.

II. Last Week in Review: Market Performance (June 29 - July 5, 2025)

A. UAE Markets: ADX & DFM

The UAE stock markets exhibited robust performance in June 2025, with the Abu Dhabi Securities Exchange (ADX) main index climbing 2.8% and the Dubai Financial Market (DFM) index advancing 4.1%. This marked their third consecutive month of gains, signaling resilient investor sentiment despite the broader regional volatility. For the immediate period, specifically the seven days ending July 3, 2025, the Emirati (ADX) market remained largely stable, showing a marginal 0.2% change. This short-term stability follows an impressive 15% gain over the past year, indicating sustained long-term growth for the market.

In June, the rally on the ADX was broad-based, with eight out of ten sector indices closing in positive territory. The real estate sector was a significant leader, surging an impressive 7.8%, closely followed by the utilities sector, which gained 6.7%. On the DFM, six out of eight sector indices posted gains during June. The materials index jumped 21.9%, and the industrial sector rose 10.8%. The heavyweight financial and real estate indices also recorded robust gains of 4.7% each. However, a shift was observed in the past week (ending July 3), where the Utilities sector on the ADX experienced a notable decline of 5.2%. This suggests some profit-taking or a rotation of capital out of this sector after its strong previous performance.

Trading activity on the ADX softened in June, with the total value of shares traded declining by 14% to Dh26.3 billion, and volumes falling 4.4% to 6.6 billion shares. ADNOC Gas was the most traded stock by volume, while First Abu Dhabi Bank led in terms of value. Conversely, the DFM saw increased trading activity in June despite the Eid holidays, with volumes up 54.6% to 7 billion shares. However, the value traded remained flat at Dh15.1 billion. Union Properties topped the monthly trading volume chart, and Emaar Properties led in traded value.

The strong overall gains for both ADX and DFM reported for June contrast with the relatively flat performance of the ADX for the week ending July 3rd. This difference in performance across timeframes suggests that while June was a period of significant upward movement, the initial days of July may have seen a phase of consolidation or minor corrections after the strong rally. Monthly figures provide a broad trend, while weekly data captures more granular, short-term volatility, emphasizing the need for investors to consider both perspectives for a comprehensive market understanding.

The market leadership can rotate quickly, as evidenced by the Utilities sector on ADX. After leading gains in June, it experienced a notable decline in the first week of July. This indicates a potential short-term shift in investor preference or profit-taking within specific sectors. While real estate continued to show strength through individual stocks, the Utilities sector's dip suggests a re-evaluation by investors. This dynamic highlights that capital can flow rapidly between different areas of the market based on changing sentiment, news, or valuation considerations.

Furthermore, the divergent trading activity dynamics between ADX and DFM in June point to different underlying market structures or participant behavior. The ADX experienced a decline in both trading value and volume, potentially influenced by the Eid holidays. In contrast, the DFM saw a significant increase in volume but flat value, suggesting that a higher number of lower-priced shares were traded, or that there were more transactions without a corresponding increase in total monetary value. This could imply increased participation from retail investors or a shift towards smaller-cap stocks. This divergence indicates that liquidity dynamics can vary significantly even within closely related markets.

B. Saudi Arabia: Tadawul

The Tadawul All Share Index (TASI) demonstrated positive momentum, rising on Sunday, June 29, with a gain of 1.21% to close at 11,202.64. This upward trend continued into the new week, with TASI rising to 11,244.45 points on July 3, 2025, marking a 1.03% gain from the previous session. Overall, the market was up 1.8% over the last week (as of July 3, 2025). The parallel market Nomu showed mixed performance, gaining 0.72% on June 29 to close at 27,248.13, but experiencing a slight decline of 0.32% on July 4, closing at 27,287.50. For the full month of June 2025, TASI ended at 11,164 points, representing a 1.58% month-over-month increase.

In June, the majority of TASI's sectors (16 out of 21) recorded month-over-month gains, with the Media sector seeing the largest increase at 22.1%. Conversely, the Energy (-2.6%) and Software & Services (-1.6%) sectors experienced declines. However, for the past week ending July 3, the Energy sector showed a rebound, leading the way with a 2.0% gain. The total trading turnover for the TASI benchmark index on June 29 was SR5.08 billion ($1.35 billion), with a strong market breadth as 218 stocks advanced and only 31 retreated. On July 3, the total value traded was SAR 5.62 billion, with 137 symbols advancing and 109 declining. Saudi Aramco maintained its position as a market leader, topping the market with the highest total value traded in June at SAR 7.15 billion.

The strong recovery across GCC markets in June, with Saudi Arabia gaining 1.6% in June and a weekly gain of 1.8%, signifies a notable shift from its May performance where a decline in TASI dragged the MSCI GCC index into the red. This demonstrates that Tadawul is not only participating in the broader regional recovery but also showcasing its inherent strength. The underlying economic forecast for Saudi Arabia, projecting a 3.6% year-on-year growth in 2025, with non-oil activities growing robustly at 4.3%, provides a strong fundamental backdrop that supports this market resilience. This positions Saudi Arabia's market as increasingly resilient and a positive contributor to the overall GCC recovery, driven by both its traditional oil sector and robust growth in non-oil economic activities.

The Saudi market's sectoral performance reflects a complex interplay of global commodity price movements and domestic monetary policy. The Energy sector, despite a monthly decline in June, led weekly gains. This rebound can be linked to the global rise in oil prices, which increased for the third consecutive week as of June 20 and likely continued to influence the sector into early July. Concurrently, the strong performance of major banks like SNB and AlRajhi suggests strength in the financial sector, potentially benefiting from the anticipated decline in domestic interest rates in fiscal year 2025, which would reduce debt burdens and free up disposable income. This highlights the need for investors to consider both external market forces and internal economic policies when evaluating investment opportunities in the Kingdom.

C. US Markets: NASDAQ Composite

The NASDAQ Composite Index closed at 20,393.13 on July 2, 2025, and further climbed to 20,601.10 on July 3, 2025, marking a daily gain of 1.02%. The Nasdaq finished the week ending July 3 with a solid 1.6% gain, contributing to its impressive June performance of +6.6% and a robust second-quarter gain of +17.7%. This marked the third consecutive week of gains for the Nasdaq, with the index closing at record highs on four of the past five trading days.

A strong jobs report, featuring Nonfarm Payrolls rising by 147K and the Unemployment Rate sliding to 4.1%, significantly boosted market sentiment. This robust data reduced expectations among traders for an immediate Federal Reserve interest rate cut in July. Cooling geopolitical tensions, specifically a cease-fire agreement between Israel and Iran, also contributed to the overall market optimism and a rebound in risk assets. Furthermore, progress on trade deals with several key countries, including Canada, the EU, Vietnam, and China, along with the passage of a large fiscal bill in Congress, further supported the market rally.

The robust US jobs report led to a significant drop in expectations for a July Fed rate cut. While higher-for-longer interest rate expectations might typically dampen growth stock performance, the NASDAQ, a tech-heavy index, rallied strongly. This indicates that the market is currently prioritizing fundamental economic strength, which implies robust corporate earnings and consumer demand, over the immediate prospect of lower borrowing costs. For tech companies, particularly those benefiting from the AI boom, a strong economy provides fertile ground for continued growth and investment. This market reaction signals a shift in focus from monetary policy easing to the underlying health of the economy, with investors confident that strong corporate fundamentals, especially within the resilient tech sector, can drive growth even in a higher interest rate environment.

Earlier in June, escalating Middle East tensions were cited as a factor stirring markets and driving oil prices higher. However, the subsequent news of a cease-fire agreement between Israel and Iran is explicitly highlighted as a factor that fueled gains and leading to a rebound in risk assets, including cryptocurrencies. This demonstrates the immediate and profound impact that geopolitical developments can have on global market sentiment and asset allocation. Geopolitical stability, even if perceived as temporary, can quickly unlock investor confidence and encourage a return to riskier assets, underscoring the sensitivity of global financial markets to international dynamics.

D. Middle East Regional Overview

The MSCI GCC index demonstrated a strong and consistent recovery during the second half of June 2025, culminating in a 3.1% gain for the month. This broad-based recovery signals renewed investor confidence. Kuwait led the regional performance with a notable 4.2% rise in June, closely followed by Dubai at 4.1%. Qatar added 2.7%, and Saudi Arabia gained 1.6% during the month.

Despite a volatile regional backdrop and fluctuations in crude oil prices, investor sentiment across the GCC remained remarkably resilient. The cooling of geopolitical tensions, particularly the reported cease-fire between Israel and Iran, contributed significantly to the overall market optimism and a rebound in risk assets. The robust gains observed across both the ADX and DFM reflect sustained investor confidence, improving economic fundamentals, and increasing interest in key sectors such as real estate, finance, and energy. Underpinning these economic fundamentals was record-breaking activity in Dubai's real estate market in May 2025, with total sales hitting Dh66.8 billion and off-plan transactions seeing a staggering 314% year-on-year increase.

The strong recovery of the GCC market index in June, despite persistent geopolitical tensions and crude oil volatility, is a significant indicator. This suggests that the region's long-term economic diversification strategies are beginning to yield results, reducing the markets' sole reliance on oil prices. The robust performance in non-oil sectors like real estate, finance, and industrial further supports this, indicating a broader, more stable economic base. The Middle East markets are demonstrating increasing maturity and resilience, showcasing that their economies are becoming less susceptible to singular external shocks, making the region an increasingly attractive and stable investment destination.

The explicit mention of record-breaking real estate activity in Dubai in May 2025, with staggering year-on-year increases in sales and off-plan transactions, is directly linked to the "robust gains across ADX and DFM." This establishes the real estate sector as a critical barometer of overall market confidence and economic health in the UAE. Its strong performance signals not just growth within the sector itself, but also broader investor confidence and economic vitality. The real estate sector in the UAE is not merely a component of the economy; it serves as a vital leading indicator of economic health and investor confidence, providing a foundational pillar for the overall market.

III. Top Performers & AI Relevance: Stocks in Focus

A. UAE Markets: ADX & DFM Stock Highlights

On the ADX in June, top performers included Abu Dhabi National Co. for Building Materials, which soared 125.3%, Fujairah Cement Industries (+77.2%), and Al Khaleej Investment Co. (+52.8%). These gains highlight strong performance in specific industrial and investment sectors. By volume in June, ADNOC Gas, Multiply Group, and Phoenix Group were the most traded stocks. In terms of value, First Abu Dhabi Bank (FAB) led with Dh3.3 billion, trailed by IHC and ADNOC Gas. For the week ending July 3, 2025, Aldar Properties (+3.2%), ADNOC Drilling (+3.0%), First Abu Dhabi Bank (FAB) (+4.1%), and Abu Dhabi Commercial Bank (ADCB) (+2.0%) showed continued strength in real estate, energy services, and banking. On July 5, International Holding Company (IHC) (Dh123M), Aldar Properties (Dh97M), ADNOC Gas (Dh85M), Presight AI (Dh72M), and Space42 (Dh66M) were among the top by value.

On the DFM in June, Amlak Finance emerged as the month's best-performing stock, climbing 49.1%. Union Properties (+34.6%) and United Foods Co. (+29.5%) also posted notable increases. Union Properties topped the monthly trading volume chart with 1.2 billion shares exchanged, while Emaar Properties led in traded value with Dh3.6 billion.

A significant development in the UAE market is the growing investor interest in AI, exemplified by Presight AI Holding PLC (ADX). This AI-focused company led the gainers' chart for May 2025 with a substantial 32.5% increase in its share price. For the week ending July 5, its trading strategy was noted as "BUY", and it was prominently featured among the top 5 stocks by value on July 5. This consistent mention and strong performance underscore AI's emergence as a key investment theme in the UAE, aligning with the broader regional strategic push for AI supremacy. Presight AI acts as a bellwether for the nascent but rapidly expanding AI sector in the UAE, indicating that investors are actively seeking exposure to companies positioned to capitalize on the AI revolution.

While new and exciting sectors like AI are emerging and gaining traction, the UAE market continues to be underpinned by the stable and strong performance of its traditional economic pillars. Companies from established sectors such as real estate (Aldar, Emaar), financials (FAB, ADCB), and energy (ADNOC Gas, ADNOC Drilling) consistently appear among the top performers or highest-value traded stocks. These sectors provide foundational stability and consistent growth, making them essential components of the market's overall health and attractiveness.

B. Tadawul: Key Stock Movements

On July 3, in the Main Market of Tadawul, CENOMI RETAIL led top gainers with a 9.85% increase, followed by SAUDI CERAMICS (+6.26%), HB (+5.55%), SAUDI GERMAN HEALTH (+5.09%), and Saudi National Bank (SNB) (+4.13%). By volume on July 3, BAAN (39.5 million shares), AMERICANA (28.7 million shares), SAUDI ARAMCO (15.3 million shares), BATIC (13.0 million shares), and BJAZ (12.5 million shares) were the most traded. In terms of value on July 3, Al Rajhi Bank (SAR 400.7 million), Saudi Aramco (SAR 378.8 million), CENOMI RETAIL (SAR 299.7 million), SNB (SAR 246.8 million), and SABIC (SAR 201.5 million) were the leaders.

While no specific AI-focused companies are explicitly listed as top performers for the week, Saudi Arabia's Vision 2030 strategy places a strong emphasis on AI for economic transformation. This includes significant investments from state-backed entities and global tech giants like Google Cloud, AWS, and Oracle in building advanced AI infrastructure within the Kingdom. This provides a crucial macro-level AI relevance for the entire Tadawul market, indicating a strategic national commitment to AI integration.

Cenomi Retail's exceptional performance, with a 9.85% gain on July 3 and a staggering 100% increase over two months despite some sell recommendations, strongly suggests robust consumer spending and high confidence within the retail sector. This aligns with the broader macroeconomic environment in Saudi Arabia, which is described as "supportive of higher consumer spending growth" and benefiting from the "ongoing expansion of domestic entertainment and leisure events". The strong retail performance is a direct reflection of these underlying economic tailwinds, indicating that domestic demand and consumer confidence are robust, likely bolstered by government initiatives aimed at enhancing lifestyle and entertainment.

The Tadawul market continues to be driven by a powerful dual engine: its globally dominant oil industry and a robust, well-capitalized banking sector. Saudi Aramco consistently appears among the top traded stocks by both volume and and value, underscoring the enduring and foundational importance of the oil sector to the Saudi economy and market. Simultaneously, major financial institutions such as AlRajhi Bank and Saudi National Bank (SNB) are consistently among the top by value and top gainers, highlighting the strength and significant influence of the banking sector. The health and performance of these two sectors are critical for overall market stability and growth, making them indispensable for any comprehensive analysis of the Saudi stock exchange.

C. NASDAQ: AI's Continued Ascent

On July 3, shares of major technology and AI companies on NASDAQ showed strong performance. Nvidia (NVDA) climbed more than 1%, continuing its impressive run. Microsoft (MSFT), Amazon (AMZN), and Broadcom (AVGO) each climbed more than 1%, indicating broad strength in large-cap tech. Apple (AAPL), Alphabet (GOOG), and Meta Platforms (META) were mostly higher, reflecting positive sentiment across the "Magnificent Seven" and other tech giants. CrowdStrike (CRWD) surged 3.6%, lauded as the "gold standard" in the cybersecurity industry, with analysts highlighting its strength in the artificial intelligence security space. Additionally, Cadence Design Systems (CDNS) and Synopsys (SNPS) saw significant gains of 5.1% and 4.9% respectively, following the US government's elimination of restrictions on exporting semiconductor design software to China.

Nvidia (NVDA) reached its highest-ever close, reclaiming its position as the world's most valuable company by market capitalization. Analysts from Bank of America and Loop Capital highlighted Nvidia's undisputed leadership in the AI market, forecasting an oncoming "golden wave" in the adoption of generative AI technology. Alphabet (GOOG/GOOGL), despite trading in the red year-to-date as of July 1, views AI as its biggest opportunity. Google Search's "AI Overviews" are now used by 1.5 billion people monthly, and the company has launched its Gemini Large Language Model (LLM) and chatbot. Its Google Cloud division, the fastest-growing part of Alphabet, offers the Vertex AI platform with over 200 foundation models for developers. The stock is currently trading at a discount due to an ongoing Department of Justice legal battle.

SentinelOne (S), an AI-powered cybersecurity platform, reported a 23% year-over-year revenue increase in its fiscal Q1 2026. Although the stock is down 20% year-to-date, it is viewed as a potential rebound candidate in the second half of 2025 due to its strong business fundamentals and AI leadership. It is also considered significantly cheaper than its rivals, with a price-to-sales (P/S) ratio of 6.6. Dell Technologies (DELL) is positioned as a key player in both AI servers and AI-enabled personal computers. The company reported $12 billion in AI server orders in Q1 fiscal 2026 and expects to ship $7 billion worth of AI servers in the current quarter, a fourfold increase from Q1, supported by a $14.4 billion AI server backlog. Dell is the third-largest PC player globally with a 16.3% market share, benefiting from upgrades to AI-enabled Windows 11 PCs. The stock is considered undervalued, trading at 19 times trailing earnings and an even more attractive 13 times forward earnings, with analysts projecting a 15% increase in EPS this year.

The consistent strong performance of Nvidia, coupled with the detailed focus on AI initiatives from Alphabet and Dell's significant advancements in AI server and PC markets, clearly demonstrates that AI is not merely a sector-specific trend but the overarching and dominant narrative driving growth across the broader tech industry. Analysts' enthusiastic descriptions, such as a "golden wave", further underscore this pervasive influence. AI has solidified its position as the primary catalyst for tech sector growth, suggesting that companies deeply integrated into the AI value chain are likely to continue outperforming.

Beyond the obvious direct beneficiaries like AI chipmakers, the market highlights a wide array of opportunities across the AI ecosystem. This includes AI-powered cybersecurity (SentinelOne, CrowdStrike), AI-enabled software and cloud services (Alphabet's Google Cloud, AI Overviews), and critical AI-enabled hardware infrastructure (Dell's servers and PCs). This breadth demonstrates that AI's transformative impact is not confined to a single niche but is creating diverse investment avenues across various technological layers, allowing for a more robust and varied investment strategy within the AI theme.

The US government's decision to eliminate restrictions on exporting semiconductor design software to China directly and immediately translated into significant stock gains for companies like Cadence Design Systems and Synopsys. This provides a clear, real-time example of how swiftly and powerfully changes in trade policy and international relations can influence specific sub-sectors within the technology industry. Government regulations, trade policies, and geopolitical developments are not abstract concepts but tangible forces that can directly create or destroy significant value within the tech sector.

IV. The Week Ahead: Key Events & Outlook (July 7 - July 13, 2025)

A. Economic Calendar: UAE, Saudi Arabia, US

United States

The most critical economic event for the week in the United States is the Federal Open Market Committee (FOMC) Meeting Minutes, scheduled for Wednesday, July 9, at 18:00 GMT. These minutes will provide a detailed account of the Federal Reserve's discussions from its June meeting, offering insights into committee members' views on inflation, economic growth, and the future trajectory of interest rates. While the Fed previously held rates steady and signaled two potential cuts by year-end 2025, recent strong jobs data has already led to a significant reduction in market expectations for an immediate July rate cut. The minutes will be closely scrutinized for any hawkish or dovish signals, as well as potential divergences in opinion among committee members, which will directly influence market expectations for monetary policy. Other less impactful events include 3-Month/6-Month Bill Auctions and the Fed Balance Sheet report on July 7.

The FOMC minutes are far more than a historical record; they serve as a crucial forward-looking indicator for market participants. Given the recent strong US jobs report that significantly altered interest rate cut expectations, the minutes will be intensely scrutinized. Any perceived hawkish or dovish signals from the Fed's internal discussions could either reinforce or contradict current market sentiment regarding future rate adjustments. A more hawkish tone might strengthen the US dollar and potentially pressure equity markets, while a dovish stance could have the opposite effect, boosting stocks. The Federal Reserve's minutes will be a primary determinant of market volatility and direction for the week, particularly for US equities and the dollar.

Saudi Arabia

For Saudi Arabia, the Industrial Production Year-over-Year (May) data is scheduled for Thursday, July 10, at 06:00 GMT+3. This event, categorized as having a low market impact, will release data on the Kingdom's industrial output. The previous value was 3.1%, with a consensus forecast of 2.5%. This data point is particularly relevant for assessing the health and progress of Saudi Arabia's non-oil industrial base, which is targeted for significant expansion under the National Industrial Strategy.

While the Industrial Production data for Saudi Arabia is categorized as "low impact" in the short term, its importance is amplified when viewed within the context of Saudi Arabia's Vision 2030 and its National Industrial Strategy. Consistent positive growth in industrial production, even if incremental, would signal tangible progress in the Kingdom's ambitious economic diversification efforts away from its traditional oil reliance. This long-term trend can significantly bolster investor confidence in the sustainability of the non-oil economy. For long-term and strategic investors, this data serves as a vital indicator of the success of the Kingdom's economic transformation initiatives.

UAE

No specific economic calendar events are explicitly listed for the week of July 7-13, 2025, in the provided research material. However, the broader economic context includes the successful auction of AED1.1 billion of T-Sukuk in June 2025, which attracted strong demand and competitive pricing, indicating robust financial market activity.

B. Major Company Earnings Reports (US)

Delta Air Lines (DAL) is the only major company with an earnings report scheduled for this week, set for Thursday, July 10, 2025, Pre Market Open (PMO). As the sole major company reporting earnings this week, Delta Air Lines' performance can serve as an early and significant indicator of the health of consumer spending and the broader travel sector. Given the global travel and tourism sector's projected substantial growth (US$11.7 trillion in 2025, a 6.7% increase over 2024), Delta's results will offer insights into the pace of economic recovery and overall consumer confidence. Strong results could signal robust discretionary spending, while weaker performance might suggest caution, potentially influencing sentiment for other consumer-discretionary sectors.

The second-quarter earnings season is officially set to commence in earnest during the second full week of July. Key banking giants such as JPMorgan Chase, Citigroup, and Wells Fargo are slated to begin reporting from July 15, which falls just outside the scope of this week's review. Analysts currently estimate a 5.0% year-over-year earnings growth rate for S&P 500 companies in Q2 2025. This would mark the lowest earnings growth reported by the index since Q4 2023. This forecast signals a potential deceleration in overall corporate profitability. This moderation, despite recent market highs, could lead to increased stock-specific volatility as investors become more discerning. It suggests that while the macro environment remains supportive, corporate earnings may not provide the same strong tailwind seen in previous quarters, leading to a more selective investment environment.

C. Macroeconomic & Geopolitical Factors to Watch

Global GDP growth is projected to slow, with the OECD forecasting 2.9% in 2025 and the World Bank projecting 2.3%. Rising trade barriers and heightened policy uncertainty continue to pose significant risks to global growth. However, the US administration has indicated a willingness to extend tariff pauses with countries demonstrating progress in trade deals. Policymakers globally are urged to reduce international trade barriers to stimulate economic growth. There is a clear tension between the broad warnings of "sharp increases in trade barriers and heightened policy uncertainty" leading to downgraded global growth forecasts and the more recent positive news of the US making "progress towards deals with a number of countries" and suggesting "willingness to extend with those countries in which deal progress is being made" regarding tariffs. This presents a mixed and complex picture: a general trend towards protectionism, but also active, targeted efforts to de-escalate specific trade conflicts. Investors must navigate a complex and often contradictory global trade landscape.

While a recent cease-fire has brought a period of calm in the Middle East, the broader regional picture remains influenced by underlying geopolitical tensions. Oil prices, which previously rose for three consecutive weeks due to Iran-Israel tensions, will remain highly sensitive to any renewed escalations. Saudi Aramco recently lowered its July 2025 oil prices for Asian markets, reflecting evolving global market dynamics. A significant, long-term factor shaping investment and development in the region is the strategic rivalry between Saudi Arabia and the UAE for AI supremacy. The detailed account of Saudi Arabia and the UAE's aggressive investments in AI infrastructure, data centers, and strategic partnerships goes beyond mere economic development initiatives. It is explicitly framed as a "vie for Middle East AI supremacy" and is contextualized as unfolding "against the backdrop of AI competition between the U.S. and China". This elevates AI from a purely technological trend to a strategic geopolitical imperative, where nations are competing for future economic and influence advantages.

Central banks globally need to remain vigilant against persistent inflation. Policy rate reductions are generally expected to continue during 2025 in most major advanced economies (excluding Japan), provided that trade tensions do not intensify further and inflation expectations remain anchored.