Tadawul Review:

Tadawul All Share Index (TASI) remained flattish on Sunday decreasing by just 13 points (-0.1%) to close at 11,975 levels. The index opened at 11,982, down slightly from Thursday's close, and traded within a range of 97 points throughout the day. Despite 15 sectors closing marginally up the TASI slipped due to index heavyweights namely Utilities (-2.2%), Materials (-0.2%), and Banks (-0.1%) sectors closing down. Al Rajhi Bank (-0.9%), ACWA Power (-2.1%), and SIPCHEM (-1.4%) put the most pressure on the index. Salama Insurance and Nayifat Finance were the top gainers for the day, both closing on their upper circuits. Trading activity witnessed attrition with the volume and value of trading dropping by 8.3% and 8.8%, respectively, from the previous session's close, reaching 152mn shares and SAR5.1bn.

 

Market Wrap International:

The global equity indices are set to undergo a more eventful period with an important FOMC meeting, acceleration in earnings season, and important economic data in focus next week. Overall, indices are likely to remain in a range- bound rally though any earnings surprise may draw a magnified reaction on either side given investors’ divided opinion and high sensitivity to negative news.  In the U.S, Fed’s FOMC meeting (due on Tue and Wed) will be a closely tracked event where the committee may decide on a minimum 75bps hike in interest rate though the odds of a 100bps hike are still not out of the window. Beyond FOMC, 2Q GDP estimates are due to be released for the U.S economy.

In Europe, the uptick in sovereign bond yield in select regional countries has put the ECB in a tight spot post a recent 50bps hike in rate and finalization of a new monetary tool aimed at supporting the member countries. Inflation for the Euro region and earnings season are the other two key drivers for stock prices next week.

In Asia, last week’s decision by the BoJ to maintain a supportive monetary policy and a similar commitment by the Chinese central bank to introduce new measures for stimulating economic growth post an anemic reading for 2Q GDP provides a positive backdrop for equity markets in the region. The softening in the US currency and the ongoing result season may further highlight undervaluation as the regional benchmark, MSCI Asia Index, trades close to a two-year low. A meeting of the Chinese ruling party’s leaders due later next week will be closely tracked for possible new measures to calm the property market in the country.