Tadawul Review:

Tadawul All Share Index (TASI) tumbled for the fifth consecutive session losing 154 points (1.3%) to settle at 11,824 levels representing its lowest closing since 10th Jan’22.  The market opened with a positive gap and soon added around 100 points before panic crept pulling the index down. The across-the-board selloff was largely triggered due to the tightening of monetary policy by SAMA, following the Feds earlier, to increase the repo rate by 50 basis points. Overall, 18 of 20 sectors closed lower and the advance to decline ratio fell to a mere 0.19x. Al Rajhi (-3.7%), SABIC (-3.6%), and SNB (-1.6) pulled the index down the most trimming 103 points. The trading activity saw an improvement as FTSE Russell implemented periodic changes boosting traded volume and value by 19% and 38%. Since the start of the week, TASI has lost 779 points (-6.3%) over concerns about global inflation and the closure of China’s economy. The index return YTD has come down from a peak of 22.5% to only 4.8% in a space of a month. In the absence of a trigger, the market is likely to move sideways in the near term.  

 

Market Wrap International:

The global equity indices moved sideways on Friday as investors’ nervousness over the future path of interest rates and growing talks of recession in developed economies weighed in. A 6% drop in crude oil prices on Friday reflected the growing investors' recession fears. Investors are also keeping a close eye on reports of earnings disappointment, particularly in the retail sector, and the release of economic data. In the U.S, the S&P 500 Index closed with little changed on Friday, losing 10 points to close at 3,675 levels. Energy (-5.5%) and Utilities (-0.9%) was the biggest drag on the index performance.

In Europe, the Stoxx Euro 600 Index moved in a narrow range and managed to close at almost the same level (+0.37 points) on Friday. The Bank of England lifted the benchmark interest rate for the fifth straight meeting on Thursday and expressed its willingness to make a more sizeable rate ahead. FTSE 100 declined by 0.4% on Friday.

 

In Asia, the equity indices presented divergent trends. Japan (Topix: -1.7%), Korea (KOSPI: -0.4%), and India (SENSEX: -0.3) broadly reflected the global recession fears and interest rate hikes. The lack of action from the Bank of Japan and the continuation of extra loose monetary policy has bogged both the currency and equity market. China (Shanghai Composite: +1.0%) and Hong Kong (Hang Seng: +1.1%) bucked the broader regional trends on economic reopening in China after the latest round of COVID-19 restrictions and pro-growth monetary and fiscal policy stance.