Tadawul Review:

Tadawul All Share Index (TASI) decreased by -0.5% (-67 points) on the first day of the week to close at the 12,555 level. The decline in global market indices and volatility in Brent oil prices dragged TASI down on Sunday. TASI opened at the level of 12,627, a slight increase (+5 points) from Thursday's level, but soon came under consistent selling pressure until the session ended. In general, 14 of the 20 sectors closed lower. The Materials (-1.8%), Banks (-0.2%), and Energy (-0.7%) sectors burdened the index and contributed to reducing the index by 47 points. Stock-wise, the shares of SABIC (-2.3%), MAADEN (-2.3%), and ARAMCO (-0.8%) contributed the most to the index decline. Saudia Dairy and Foodstuffs Company and the Red Sea International Company were the top gainers during the session, as they closed at their upper circuits (+10.0%). The volume and value of trading activity witnessed their lowest levels in August, declining by -30% and -26% to reach 130mn shares and SAR5.5bn.

 

Market Wrap International:

The global equity indices are set to undergo a cautious next few session as the investors digest a plethora of new developments ranging from the latest posturing of the Fed’s officials, economic data in the Euro region, and prime lending rate resetting in China. In the U.S, the latest unexpected hawkish statement from a Fed official has watered down market expectations of a measured rate hike by the Fed in the upcoming policy meeting. This is also reflected in the upward shift in the yield curve and yields on longer-dated bonds hovering close to recent highs. Next week’s Fed Annual Jackson Hole Symposium and economic data release will be closely tracked for further clues to Fed’s stance on interest post-below-expected CPI print recently.

In Europe, not-so-encouraging economic data (inflation, consumer sentiment, etc) has compounded the challenges for the policymakers in the backdrop of energy shortages, a relatively more hawkish Fed, and the Euro showing the latest signs of downside volatility against the USD.  Given the recent performance of key indices, the risk of downside volatility for benchmark indices has increased.

In Asia, investors will keep a close eye on the materialization of promised support measures for economic revival in China. In this regard, China’s central bank is expected to announce a cut in the policy rates for prime lenders on Monday. That said, Asia markets will also take a cue from the volatility in the international markets in the U.S on Friday, a renewed risk to EM currencies, and foreign selling-the three key themes which dragged the markets down in the preceding week. A sharper than expected cut by China’s central bank may produce short-term excitement in the region.