Stocks react poorly to the external positive at the opening of trading

Our Comments and Expectations

External background. The S&P 500 surged by 2.9% yesterday, while the Nasdaq Composite gained 3.8% amid hopes for a potential end to the war. The catalyst was a report by Iran’s state news agency stating that during a phone call between Antonio Costa and Iranian President Masoud Pezeshkian, the latter said Iran has the “necessary will to end this war,” provided that “further aggression is prevented.” According to The Wall Street Journal, U.S. President Donald Trump and his advisers assessed that the mission to reopen the Strait of Hormuz could prolong the conflict beyond the planned four to six weeks. Trump also stated that the U.S. would withdraw from Iran within two to three weeks. His press secretary said he will address the nation at 9:00 p.m. ET on Wednesday (6:00 a.m. Thursday Almaty time). Oil prices dropped sharply: Brent Crude Oil fell from $118 per barrel yesterday to $100.9 this morning. Meanwhile, U.S. consumer confidence unexpectedly rose in March, while job openings declined in February amid slowing hiring. Investor Warren Buffett warned about rising instability in the U.S. banking system as its links with non-bank financial institutions deepen. European indices posted modest gains, while futures rose by 2.2–2.7%. Inflation in the eurozone increased to 2.5% year-on-year in March from 1.9% previously. Following this data, traders reduced expectations of an April rate hike by the European Central Bank to 50%. Asian markets are rallying strongly this morning, with previously hardest-hit markets rebounding the most. KOSPI jumped 8.4%, while Nikkei 225 gained 5.2%. Chinese and Hong Kong indices are up 1.6–2.3%. S&P 500 futures are currently rising another 0.75%.

KASE Index. The KASE Index closed neutral yesterday, continuing its sideways movement. Today’s opening is slightly negative, as stocks correlated with Western markets have not yet reacted positively to the global rally.

Index stocks. Today we will be watching Halyk Bank, Kaspi.kz, and Kazatomprom. Judging by yesterday’s European close and current futures, our GDRs missed the positive impact of yesterday’s news and may reflect it today. For example, Kazatomprom fell 1.6% on the London Stock Exchange yesterday, although uranium funds in the U.S. rose by 7–8%. At today’s KASE opening, Kazatomprom is up only 0.1%, while LSE pre-market trading already indicates a 4.5% gain. A similar situation is seen with Halyk Bank, whose GDRs are up 3.5% in London. In our view, local investors could show more activity by buying assets at the market open. However, the ongoing rally of the tenge may currently act as a headwind for equities. Shares of KazMunayGas are down 2.2% at the open.

Currency. The U.S. dollar continues to weaken against the tenge today. The USDKZT pair is currently trading around 475. According to the RSI indicator, the pair is entering oversold territory, which may serve as an early signal of a potential reversal.