Tadawul Review:

Tadawul All Share Index (TASI) started the week on a positive note, ending Sunday's session with an increase of 44 points (+0.4%) to close at 12,199 levels, the highest since mid of last month. TASI touched its highest level in July during the first two hours of the session’s trading, reaching 12,269, before falling back and losing 69 points. In general, 16 sectors out of 20 closed in the green, while 174 stocks rose and 29 stocks declined. For a change, the index was led by the Materials (+1.9%), Real Estate (+1.6%), and Health care (+1.8%) sectors. Amongst the stocks, SABIC (+1.8%), Sabic Agri (+4.4%), and Dar Al Arkan (+6.0%) contributed the most to the index gains. The trading activity normalized when compared to the previous session as the value and volume traded dropped by 44% and 49% to 178mn shares and SAR6.0bn, respectively.  Following TASI’s horrible performance in June (down by 1,398 points or 10.8%), the month of July provided some respite for the investors as the market managed to gain +676 points (+5.9% MoM). The market may look to consolidate at current levels given the strong earnings season and healthy macroeconomic outlook of the Kingdom.

 

Market Wrap International:

With two major events, FOMC rate hike and a meeting of Chinese leadership (Politburo) already passed behind the market, the ongoing result seasons and the upcoming economic data will likely dominate the proceedings of the global equity markets. The performance of major equity markets last week suggest most of the excitement on comments from the Fed Chairman is already priced in. In the U.S, the labor market and manufacturing data are due for release next week. The upcoming data will likely substantiate market’s fears of a recession in the U.S economy and may not produce a big reaction in the markets. Several high-profile results are due next week in the energy, pharma, and tech sectors which will likely dominate the investor's focus.

In Europe, the last week's economic data release highlights the persistence of high inflation and clear signs of stress on economic activity. However, earnings announcements (Shell, Rio, among others) propped up the markets to their highest monthly returns since Nov-22. On the policy front, BOE is due to decide on the policy rate next week and analysts are expecting the bank to announce yet another rate hike.

In Asia, the political tension between the U.S and China and the lack of announcement of fresh stimulus measures in a high-profile meeting of leadership may keep any upside in check and further accentuate investors’ focus on economic data and updates on property markets. Elsewhere, politics in Korea (infighting in the ruling party) and Japan (following the latest release of the opinion survey), and a central bank meeting in India remain important events for the next week.