Our Comments and Expectations
External Background.
The S&P 500 rose by 0.9% yesterday — lower than what futures had indicated in the morning. The index recovered nearly all losses from the previous day. Trump stated that Iran is willing to discuss de-escalation of the deadly conflict with Israel, even though Middle Eastern countries have been exchanging fire for four consecutive days and show no signs of stopping. When asked whether the U.S. would become more involved militarily, the American leader said he did not want to discuss that. He then left the G7 summit early, calling to “evacuate Tehran” without clarifying what he meant — sparking concerns over Trump’s ability to contain the conflict.
Today’s focus is on U.S. retail sales data, which likely fell by 0.6% in May after a modest 0.1% increase in April. Import prices are expected to drop by 0.2% month-over-month. The next Federal Reserve meeting is scheduled for tomorrow. Meanwhile, European indices posted gains of 0.3–0.8%.
Morning futures for the S&P 500 are down 0.3%, while Stoxx 600 and DAX are losing around 0.6%. Brent crude rose yesterday but ended the session lower. This morning, the contract is trading at around $73 per barrel. Asian markets are mixed: Hang Seng is down 0.4%, and Nikkei 225 is up 0.6%.
Bonds.
The yield on U.S. 10-year Treasuries jumped to 4.45% yesterday, reflecting a decline in geopolitical risk concerns.
KASE Index.
The KASE index rose a solid 1.5% yesterday. This supports our optimistic expectations, which were based on technical analysis, rising oil prices, and the reinvestment of Kazakhtelecom dividends.
Index Stocks.
Kazatomprom led the gains yesterday, rising 5.2% on the LSE. Uranium prices surged 8.2% following news that the Sprott Physical Uranium Trust raised $100 million in a deal with Canaccord Genuity, which will repurchase the fund’s ETF. Later, Sprott clarified that it had actually raised $200.1 million to purchase physical uranium.
KazMunayGas added another 5.3% despite oil prices slowing down. Air Astana also showed notable growth, breaking out from a triangle formation. Bank CenterCredit shares rose 1.4%, continuing to hit new record highs.
Reminder: today and tomorrow are the final scheduled dividend payment days announced by Kazakhtelecom. We expect this will positively impact the local market and lead to a redistribution of funds into other leading index stocks.
This morning’s trading opened on a positive note: all stocks are gaining except KazTransOil, which is down 0.1%.
Currency.
The U.S. dollar continues to strengthen against the tenge for the third straight session, ignoring the rise in oil prices. As of this morning, USDKZT is trading at 512. We maintain our mid-summer scenario of the dollar reaching up to 530 KZT at its peak.