Tadawul Review:

Tadawul All Share Index’s (TASI) surged in the first session of the week to add 159 points (+1.3) taking the index to 12,689 levels. The index opened with a positive gap of 104 points and managed to touch a high of 187 points by mid-day before some profit-taking took place bringing the index down to close at its highest levels since 18th May. The rise was broad-based with 19 out of 20 sectors closing up which was mirrored by the advance to decline ratio of 2.6x. Banks (+1.5%), Energy (+1.6%), and Materials (+0.8%) lead the index charge cumulatively contributing 101 points to the index gains. Al Rajhi Bank (+2.3%), ARAMCO (+1.6%), and SNB (+1.3%) were the major contributors while SABB (-1.9%), Al Habib (-3.2%), and Ma’aden (-1.0%) were the major drags. Trading volumes and value dropped by 10% and 15% to 151mn shares and SAR6.0bn. Brent prices have risen by 6.1% WoW to USD119.4/bbl and are trading just 7% below their recent high of USD128/bbl in March. The elevated levels of crude oil prices mght provide much-needed support to TASI in the near term.

 

Market Wrap International:

Investors will return from the Memorial Day holiday focused on Europe, where leaders will gather in Brussels. While the EU is unlikely to adopt a complete ban on Russian oil, a prohibition on seaborne deliveries or the tone of the debate might have an influence on the energy market. The Organization of Petroleum Exporting Countries (OPEC) is also scheduled to meet next week, though no dramatic pyrotechnics are expected with the output declaration. Construction expenditure, factory orders, U.S. vehicle sales, and the May jobs report are all important economic statistics to keep an eye on. Economists predict that 329K jobs will be added this month, down from 428K in April. The unemployment rate is expected to drop from 3.6% to 3.5%.

Inflation in the Eurozone will be the focus of attention this week, and expectations are that prices will increases to reach new highs. High energy costs, along with low sentiment, are slowing the bloc's recovery. However, rising inflationary pressures are bolstering the European Central Bank's determination to raise rates. Some countries have been hurt worse by the energy price shock than others. France stands out, with government pricing controls on gas and electricity softening the hit for consumers — annual inflation in May was 5.6%. Spain, on the other hand, is expected to see a price increase of 8.4% this month. The interruption caused by Russia's invasion of Ukraine will be reflected in its activity numbers for April. Meanwhile, Turkey's inflation is expected to reach 76% in April, surpassing its 2002 high. It won't be enough to persuade policymakers to back rate rises though.