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Tadawul Shares Close Lower on Wednesday; Saudi Arabia's PMI Shows 'Notable Improvement' in May

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The Tadawul Share Index closed Wednesday 0.12% in the red as the geopolitical tensions in the Middle East overshadowed the cheer about the continued growth of Saudi Arabia's non-oil private sector.

The Riyad Bank Purchasing Managers' Index, a closely watched survey of the kingdom's business conditions, grew to 52.8 in May from 51.5 in the prior month. Data showed an uptick in market demand and output.

"The improvement was mainly driven by stronger output and new orders, supported by improving domestic demand and the restart of previously delayed projects. Firms reported better business conditions during May, with output growth reaching its strongest level in three months," Riyad Bank Chief Economist Naif Al-Ghaith commented. "Employment also returned to growth, while purchasing activity improved for the first time since February, reflecting rising confidence among businesses regarding future demand conditions."

Dampening sentiment is Iran's missile and drone strikes in Kuwait. The incident resulted in damage at the Kuwait International Airport and at least one casualty. The US, meanwhile, also launched attacks on Qeshm Island near the Strait of Hormuz.

Back at home, the Office of the US Trade Representative proposed to impose additional US duties between 10% and 12.5% on Saudi Arabia after a Section 301 investigation. The investigation found that the Middle Eastern country did not impose or effectively implement prohibitions on the importation of products made using forced labor.

On the corporate front, Retal Urban Development (SASE:4322) secured a contract to act as the exclusive development manager of the Retal Heights project in Riyadh. Shares of the real estate developer closed flat.

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