NEW YORK: Stock investors on Monday will be seeking to divine if the deepest weekly slide since January 2016 will continue or if the market will turn the corner after one of the most volatile five days in years.
Equal parts science, art and luck may be needed to pick a bottom in the S&P 500. While it ended last week on an up note, the index was caught in its first correction in two years, after a 7 percent rally this year that culminated with a record high on Jan. 26, following a 19 percent 2017 gain.
While Wall Street experts caution that it is difficult to definitively pinpoint a turning point, several said they will monitor a number of indicators that could help show if the selloff has ended. “People sometimes get pulled into wanting to call tops or bottoms,” said Frank Cappelleri, chief market technician at Instinet in New York.
“I would say it is almost impossible to do that, especially on a continued basis, but I think identifying patterns when they develop can at least give you a sense that things are turning just a bit.”
FEWER NEW LOWS: Wall Street’s main stock indexes climbed more than 1 percent on Friday, giving investors some solace after a week of huge swings that shook the market out of months of calm. Even with Friday’s gains, the benchmark S&P 500 fell 5.2 percent for the week, its biggest weekly percentage drop since January 2016, as volatility spiked. “You want to see that less stocks are making new lows even if the whole market is down,” said Keith Lerner, chief market strategist at Suntrust Advisory Services.
SEARCHING OUT THE SECTORS: Cappelleri is watching for pockets of strength. “That’s step one: Seeing the bleeding stop, at least for a few different areas or groups. And then from that point we can see if that broadens out a bit,” he said. Better performance of economically sensitive sectors such as financials could be a sign that investors are becoming less bearish. “When people feel better about the market you don’t want to see utilities lead,” Lerner said.
TECH TRIPS UP: “Any final flush for US equity markets has to pull this group much lower and very quickly,” said Nicholas Colas, co-founder of DataTrek Research. “One big reason we don’t think US stocks have bottomed: This hasn’t happened yet.” The S&P 500 technology index led market gains in 2017, rising 36.9 percent for the year. The technology index is down 0.28 percent so far this year, while the S&P 500 is down 2.02 percent.
VIX VISION: The market’s fear gauge, the CBOE Volatility Index, known as the VIX, has spiked in recent days and earlier last week hit its highest level since August 2015. “I’d like to see the VIX tamed and move back to the lower end of its trading range,” said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama. Colas said: “It is a declining VIX (often over weeks, not days) that sets the floor for stocks, not a peaky top. So even if this week was the high water mark for the VIX in this correction, we may well see stocks slip further.” In the months before the selloff, the VIX was trading between about 10 and 13, well below its long-term average of 20. It closed Friday at 29.06.
RELATION TO RATES: An increase in bond yields has been seen as a catalyst for the selloff, presenting investment competition to equities at a time when stock valuations are expensive. “If we see some stabilizing in interest rates and bond yields in particular, that would seem to indicate what’s going on there has settled down,” Hellwig said. US benchmark 10-year Treasury note yields early last week surged to 2.885 percent, the highest level since January 2014.
PANIC SAFE-HAVEN BUYING: Jim Paulsen, chief investment strategist at The Leuthold Group in Minneapolis, is looking for “full-on panic.” There has been no sign of investors rushing into safe havens such as gold, US Treasuries and the dollar. “To find the end you need to see evidence that it truly has convinced people it’s going to go down more, or there’s panic,” Paulsen said. “And I just haven’t seen that yet, at least in behavior.”
MINDING MOMENTUM: Vincent Catalano, global macro strategist at Blue Marble Research in New York, is watching a key indicator of market momentum known as the moving average convergence divergence line, or MACD. “When the line starts to flatten out, that’s an indication that the pressure is ending, that we’ve reached the short-term bottom,” Catalano said. MACD is a momentum oscillator widely followed by chartists that is based on the relationship between moving averages.
TEST OF 200-DAY MOVING AVERAGE: In the most recent bull market’s pullback, the 200-day moving average of the S&P — currently at 2,539 — has been tested, said Brad McMillan, chief investment officer of Commonwealth Financial Network in Waltham, Massachusetts. On Friday, the S&P 500 briefly dipped below that level before rebounding. “That’s typically what we’ve seen in past market cycles. It’s stopped and bounced around at that point,” McMillan said. But if the S&P 500 were to sustain losses below that mark, he said, a “big round number,” such as 2,500, would be the next support level he would look for on the S&P.
Eight signals to watch that the US stock rout is over
Eight signals to watch that the US stock rout is over
UAE, Saudi Arabia ranked as leading global entrepreneurial ecosystems
RIYADH: The UAE and Saudi Arabia have been ranked first and third respectively in the Global Entrepreneurship Monitor report for 2023-2024.
The report, which assesses the entrepreneurial ecosystems of countries worldwide, is highly regarded by international bodies such as the World Bank, International Monetary Fund and various UN organizations,
Saudi Arabia showed significant progress in its entrepreneurial environment, with its National Entrepreneurship Context Index score increasing from 5.0 in 2019 to 6.3 in both 2022 and 2023.
This reflected the country’s successful efforts to diversify its economy and foster a supportive climate for entrepreneurship, said the report. A notable highlight was increased female entrepreneurship, with eight women starting new businesses for every 10 men in 2023.
The country also has the highest proportion of adults who know an entrepreneur, perceive ease in starting a business, recognize good business opportunities, and believe they possess the necessary skills and experience to start a business.
However, despite high acknowledgment of opportunities and capabilities, there remains a considerable fear of failure, the report concluded.
Additionally, a significant percentage of Saudi entrepreneurs are expected to leverage digital technologies and focus on minimizing environmental impacts and maximizing social impacts, indicating a readiness for future challenges.
Meanwhile, the UAE set a record with its National Entrepreneurship Context Index score of 7.7, the highest in the report’s history.
The report also positioned the UAE as the best environment in the world for starting and conducting new business ventures, surpassing many advanced economies. It also ranked third globally in terms of physical infrastructure.
Significant strides have been made in entrepreneurship education within schools, emphasizing skills like creative thinking, problem solving, opportunity recognition and risk assessment. The country ranked among the top five out of 49 in this aspect.
Saudi Arabia, Azerbaijan discuss climate action cooperation ahead of COP29
- Two ministers discussed opportunities for work and cooperation between their two countries in the field of climate change
JEDDAH: Saudi Arabia’s Minister of Energy Prince Abdulaziz bin Salman met with Azerbaijan’s Minister of Environment and Natural Resources Mukhtar Babayev on Thursday.
Babayev has also been appointed president of the UN COP29 climate talks which will be held in Baku in November.
During the meeting, the two ministers discussed opportunities for work and cooperation between their two countries in the field of climate change. They also talked about joint efforts to achieve the goals of the UN Framework Convention on Climate Change and the Paris Agreement, the Kingdom’s ministry said in a statement.
They reviewed the Kingdom’s efforts and initiatives in dealing with the effects of climate change, such as exploiting renewable energy sources, and managing, reducing and eliminating emissions through the Saudi and Middle East green initiatives.
In addition, the ministers discussed implementing the circular carbon economy approach and its technologies, which was developed by the Kingdom during its G20 presidency and endorsed by leaders, along with other national and regional programs and initiatives.
Saudi Arabia unveils Green Finance Framework in sustainability push
RIYADH: Public and private participation in climate financing in Saudi Arabia is poised to receive a boost with the introduction of the Green Finance Framework.
This initiative, launched by the Ministry of Finance, is aimed at propelling the nation toward its sustainability goals and achieving net-zero emissions by 2060, Saudi Press Agency reported.
The framework is expected to contribute to the efforts aimed at reducing emissions through a circular carbon economy approach, along with positioning Saudi Arabia as a regional leader in sustainable finance.
It was in October 2021 that Saudi Arabia announced its ambitious goal to achieve net-zero emissions by 2060.
With this framework, the Kingdom aims to significantly reduce greenhouse gas emissions by 278 million tonnes annually by 2030, aligning with the commitments under the Paris Agreement.
The Paris Agreement is an international treaty on climate change that was produced in 2015 and compels signatories to work toward limiting the global temperature increase to 1.5 °C above pre-industrial levels.
The Kingdom has been spearheading several initiatives including the Saudi Green Initiative to combat the adverse effects of climate change over the past few years.
On March 27, the Kingdom celebrated its first Saudi Green Initiative Day highlighting the importance of fostering a sustainable legacy for future generations.
The celebration was organized under the theme “For Our Today and Their Tomorrow: KSA Together for a Greener Future” and it highlighted the collaboration of more than 80 public and private sector projects that are part of the SGI.
To date, Saudi Arabia has deployed 2.8 gigawatts of renewable energy to the national grid, powering more than 520,000 homes, with additional projects underway to increase capacity.
Moreover, more than 49 million trees and shrubs have been planted throughout the Kingdom since 2021, and extensive land rehabilitation efforts have been undertaken.
Additionally, energy giant Saudi Aramco, in collaboration with the Kingdom’s Ministry of Energy is building a carbon capture and storage hub in Jubail, which will have 9 million tonnes annual storage capacity upon its completion in 2027.
Closing Bell: Saudi main index slips to close at 12,565
RIYADH: Saudi Arabia’s Tadawul All Share Index slipped on Thursday, losing 42.09 points, or 0.33 percent, to close at 12,565.89.
The total trading turnover of the benchmark index was SR10.53 billion ($2.8 billion) as 54 stocks advanced, while 170 retreated.
Similarly, the Kingdom’s parallel market, Nomu, dropped 385.72 points, or 1.43 percent, to close at 26,622.88. This comes as 20 stocks advanced while as many as 42 retreated.
Meanwhile, the MSCI Tadawul Index rose 7.54 points, or 0.47 percent, to close at 1,599.02.
The best-performing stock of the day was Modern Mills for Food Products Co. The company’s share price surged 9.46 percent to SR68.30.
Other top performers include the Mediterranean and Gulf Insurance and Reinsurance Co. as well as Al Yamamah Steel Industries Co.
On the announcements front, Red Sea International Co. announced its annual consolidated financial result for the period ending Dec. 31.
According to a Tadawul statement, the entity’s revenues reached SR1.37 billion in 2023, reflecting an increase of 241 percent when compared to 2022 figures.
The rise in sales is mainly attributed to the strategic acquisition of a 51 percent stake in Fundamental Installation for Electric Work Co., or First Fix, with the recognition in RSI’s consolidated financial statements starting in the final quarter of the year.
Additionally, the company has tactically increased its focus on enhancing its supply chain and adopting competitive pricing strategies while advancing procurement techniques.
On a similar note, the firm’s net profits during the same period hit SR2.17 million, up from a net loss of SR198 million, which was recorded in the same period in 2022.
This rise is mainly linked to positive impact of the First Fix acquisition, in addition to the improvement in revenues and operating performance.
Moreover, Riyadh Steel Co. has also announced its annual financial results for 2023.
A bourse filing revealed that the firm’s net profit reached SR11.14 million in the period ending on Dec. 31, reflecting an increase of 118.8 percent compared to the corresponding period a year earlier.
The increase in net profit is primarily attributable to a reduction in the cost of revenue and secondarily to a rise in other income in comparison to the previous year.
Furthermore, Al-Baha Investment and Development Co. also announced its annual financial results for the period ending on Dec.31.
According to a Tadawul statement, the company’s net profit hit SR4.94 million in 2023, up from the net loss of SR8.09 million that was recorded in 2022.
The increase was owed to a 39 percent surge in the group’s revenues and reduced financing costs by 73 percent, among other reasons.
Saudi Arabia leads the charge toward energy transition: report
RIYADH: Saudi Arabia is emerging as a proactive leader, pioneering green initiatives to mitigate economic challenges posed by the transformation toward sustainability, according to the International Monetary Fund.
A recent report by the IMF highlighted the intricate dynamics at play and underscored the Gulf Cooperation Council and Saudi Arabia’s strategic positioning in this evolving scenario.
Titled “Key Challenges Faced by Fossil Fuel Exporters during the Energy Transition,” the study discussed climate change mitigation efforts in many fossil fuel exporting countries.
As Saudi Arabia and its GCC counterparts continue to lead the charge toward sustainability, they set a precedent for the global community.
By embracing green initiatives, investing in renewable energy, and fostering economic diversification, these nations are paving the way for a sustainable future, balancing economic prosperity with environmental responsibility.
The report emphasized that the Saudi Green Initiative launched in 2021 aimed at combating climate change and reducing carbon emissions.
It explained: “The Green Initiative is centered around three objectives, including targets for increasing the share of renewable energy in electricity generation up to 50 percent by 2030 and the deployment of circular carbon economy technologies, including carbon capture utilization and storage.”
Key challenges
The IMF stressed the need for economic diversification to effectively mitigate the impact of declining fossil fuel revenues.
Highlighting Saudi Arabia’s progress in economic diversification, the report explained: “The non-oil sector growth has accelerated since 2021, reaching 4.8 percent in 2022 spurred by strong domestic demand, especially in the wholesale, retail trade, construction, and transport sectors.”
Similarly, Bahrain, Qatar, and the UAE are diversifying their economies away from hydrocarbons, the study added.
In the UAE, non-hydrocarbon GDP was expected to grow by 5.3 percent in 2022, driven by tourism and FIFA World Cup impacts.
Progress on the Comprehensive Economic Partnership Agreements will further boost trade, attract foreign direct investment, and enhance integration with global value chains, according to the report.
The IMF highlighted that in Saudi Arabia, “the share of high-skilled jobs has increased to more than 40 percent in 2022, and female labor force participation doubled in four years to reach 37 percent in 2022.”
In its report, the Washington-based lender said the governments heavily reliant on revenues from fossil fuel exports face challenges in maintaining fiscal sustainability as these revenues decline.
“Countries with significant exposure to the fossil fuel industry may experience higher financial sector risks, including balance sheet effects, asset devaluation, and increased vulnerability to international market fluctuations,” it said.
The report added that transitioning away from fossil fuels may result in job losses in the fossil fuel industry, necessitating retraining programs and support for affected workers.
It called for structural reforms to address all the issues. “Accelerating structural reforms to diversify export bases and develop alternative industries is critical for mitigating the adverse macroeconomic effects of the energy transition,”the report said.
The IMF stressed the need for coordinated global efforts to overcome all these challenges. “Collaborative efforts can help ensure a smooth transition, mitigate transition costs, and support affected countries in diversifying their economies,” the report said.