Our Comments and Expectations
External Background The S&P 500 rose by 0.9%, closing just three points below its all-time high. Mega-cap companies, industrials, energy, and banking stocks led the gains. Mike Mayo, a well-known analyst at Wells Fargo, stated he expects U.S. bank stocks to continue rising, citing looser regulations, steady deal-making, and rising interest rates. Despite potential risks, analysts forecast further growth, pointing to the largest regulatory restructuring by the Fed in three decades, improved operating leverage, and rising revenues. Economic data strengthened expectations that the Fed may ease monetary policy at least twice this year. U.S. consumer spending grew at its slowest pace since the pandemic began, with services contributing just 0.3 percentage points to GDP in the first quarter — the lowest since Q2 2020. As a result, GDP growth was revised down to 0.5% annualized. Continuing jobless claims rose to their highest level since 2021, although initial claims declined. Traders are now fully pricing in two rate cuts by year-end starting in September, and expectations for a third cut could rise if next week’s jobs report is weak. Asian markets opened with modest declines in Hong Kong and Korea but posted solid gains in Japan. S&P 500 futures are up 0.16%. U.S. Commerce Secretary Howard Lutnick announced that the U.S. and China have finalized the trade understanding reached last month in Geneva, adding that the White House is set to sign agreements with a group of 10 key trading partners soon. Oil prices remain below $68 per barrel in early trading.
Bonds The yield on 10-year U.S. Treasuries is falling amid rising expectations of interest rate cuts. Corporate bonds showed gains.
KASE Index The KASE index had a modest trading session yesterday, dropping by 0.3%, with trading volumes continuing to decline. Technically, the market remains within a local consolidation range.
Index Constituents Most stocks in the index are showing stagnation, much like the index itself. Consolidation is currently seen in Bank CenterCredit, Halyk Bank, Kcell, KEGOC, Kaspi, and KazTransOil. Air Astana shares have declined for the third session in a row. Kazakhtelecom and Kazatomprom are giving moderate signals of a potential correction. On Nasdaq, Kaspi rose by 1.8% and, as expected, is approaching the downward trendline for another test. Air Astana GDRs dropped to their June 5 lows, which also represent historical minimums.
Currency The USDKZT exchange rate rose by 0.5% today. On the forex market, the dollar is trading at 520.4 tenge, once again breaking above the downward trendline. Meanwhile, the dollar is weakening globally, and oil and the ruble remain stable — indicating that the currency movement is driven primarily by domestic factors.