Tadawul Review:

Tadawul All Share Index (TASI) started the week with a volatile session managing to add 51 points (+0.4%) to close at 12,656 levels. The market plunged soon after opening to hit a low of 12,558 (down 48 points) before steadying and posting a gradual recovery. The advance was led by Banks (+0.2%), Energy (+1.1%), and Materials (+0.4%) sectors cumulatively adding 31 points. ARAMCO (+1.1%) was the top contributor adding 23 points to the index gain. Anaam International Holding (+10.0) was the top gainer for the day while Amana Cooperative Insurance (-6.0%) slumped the most. Trading volumes and value declined by 23% and 25% to 138mn shares and SAR4.9bn. Brent oil has advanced to USD120/bbl levels as tight market concerns outweigh OPEC+ production increase announcement. The market might look to consolidate at current levels given elevated oil prices. 

 

Market Wrap International:

Investors will be discussing inflation again next week, with the next consumer price index coming on June 10. Economists predict that headline inflation will be 8.2 percent year on year in May, down from 8.3 percent in April, with core CPI falling to 5.9 percent from 6.2 percent. Some experts believe a relief rally is possible if there is no upward CPI surprise. Nio is among the notable firms set to report profits next week, while AMD and Wendy's will host investor gatherings. In the technology sector, Apple's developer conference will be highlighted, while Facebook parent Meta Platforms' ticker will be changed to META to better represent its new emphasis.

The week ahead will see two central banks take opposing approaches to monetary policy. The European Central Bank will revise its inflation estimates and lay the groundwork for a July launch. In contrast, the Bank of Russia will likely lower interest rates in order to stimulate economic development. With the market expecting the first ECB rate hike in July, President Christine Lagarde's news conference will be eagerly watched for any remarks on the possibility of a 50-bp increase rather than a 25-bp increase. Russia is set to decrease interest rates by 100 basis points as policymakers focus on the resilience of the ruble and softening the impact to the economy. Data releases will reveal that German industrial production is still being hampered by supply concerns connected to the Ukraine crisis. Meanwhile, data from Russia may imply that inflation has peaked there.