Our Comments and Expectations
External Background. The S&P 500 index declined for most of the session yesterday but began to rise towards the end. The main news on Tuesday morning was Trump’s statement that he informed his aides of the U.S. readiness to end the military campaign against Iran, even if the Strait of Hormuz remains largely closed. Simultaneously, Iran attacked a fully loaded Kuwaiti oil tanker near the anchorage area of Dubai port. Reports indicate that Tehran is encouraging the Houthis to prepare to resume campaigns against shipping in the Red Sea. According to Bloomberg Economics, Brent oil prices could jump to $140 if the conflict spreads to the Red Sea. S&P 500 index futures are up 0.7% in the morning. Yesterday, Powell said long-term inflation expectations appear under control, and traders renewed bets on Fed rate cuts this year. Fed’s John Williams noted that interest rates are in good shape despite supply chain disruptions caused by the war. Today, investors will monitor JOLTS job openings data. February’s report is expected to show moderate growth in vacancies. In Europe, indices rose yesterday despite inflationary pressure. Reports indicate that inflation in Germany sharply accelerated in March after the outbreak of war with Iran, leading to higher energy prices. Sentiment in Asian markets remains negative — Kospi down 4.3%, Nikkei 225 down 1.6%. Brent oil remains around $113 per barrel.
KASE Index. KASE closed slightly down at 0.3% yesterday. However, the daily candle showed high volatility, falling to 7549 points during the session, a 2.3% decline.
Index Stocks. Volatility was seen in KazMunayGas shares, with investors seemingly unable to decide on the movement direction and periodically taking profits. This reaction is generally justified because the stock has already shown significant growth, and the future dynamics of oil remain uncertain, despite occasional forecasts of $140–200 per barrel. Also, a significant portion of oil goes to the domestic market where local refineries enjoy considerable discounts. Kaspi shares fell the most yesterday, but ADS grew 1.9%, making them the top-performing papers on KASE in the current session. Kazatomprom fell 0.9%, while uranium company stocks dropped 2.2–2.9%. Halyk Bank GDRs fell for the second session in a row after active growth on March 26 and remain in a sideways trend. Currently, the most notable decline is in Air Astana shares. Today it was announced that the board proposed 9.92 KZT per share dividends to shareholders, which could further lower the price given last year’s level of 53.7 KZT. On the other hand, the reduction in payout was expected.
Currency. The dollar is attempting to break lower from local consolidation today. USDKZT is currently trading at 478.8 KZT. If sustained, this would signal continued strengthening of the tenge.