Our comments and expectations
External background. The S&P 500 lost 1% yesterday near historic highs. Various factors are cited as the reasons for the decline — from a strong report on the labor market, due to which markets now expect less easing of the PREP, to the escalating geopolitics in the Middle East. For the first time since August 1, money markets expect the Fed to cut the rate by less than 50 basis points by the end of the year. Citi now expects a quarter-point decline next month, reversing its earlier forecast for a larger move. Judging by the index map, the main pressure came from large technology companies. UBS recommended buying regional banks and favored tactical declines in Chinese stocks. Meanwhile, Hurricane Milton became the strongest in the Atlantic this year, hitting Florida as a category 5 storm. In Europe, the indices showed a moderately positive result. Industrial production in Germany unexpectedly increased by 2.9% month-on-month in August against the expected 0.8%. This morning, there has been a sharp drop in the Hang Seng index by 7.5% due to the fact that the government has not introduced new stimulus measures. The fall was already an expected event, since in previous sessions professional market participants tended to reduce long positions in the Chinese market. Nevertheless, it is reported that home sales in China jumped during the holidays, in Beijing there was a doubling of intentions to buy new homes in the first three days of October, and in Shenzhen they increased more than 10 times in the first six days. Oil rose above $80 yesterday for the first time since August, but returned to $79 today. Bonds. The yield on 10-year US government bonds continues to grow and yesterday exceeded 4%, which was last observed in August. Corporate bond ETFs continue to decline and may soon test their 50-day moving averages. The KASE index. The rebound in the local market has stopped, as the index quotes closed yesterday without significant changes. Index shares. Half of the stocks in the index closed unchanged. Kazatomprom showed the greatest growth, however, quotations on the LSE fell by 3.5%, which led to a 1% decrease in shares since the opening of trading on KASE today. From a technical point of view, this decrease does not have a significant impact, since the quotes are moving in a wide sideways trend. As noted earlier, an important resistance level is at $39.3. Kaspi on Nasdaq also declined yesterday. It is worth noting the increased influence of the American market on stocks after the transition from the London Stock Exchange. This decline stopped the rebound that began on October 2. Air Astana shares declined, however, we expect that the quotes will meet support at the level of $6.4 (760-780 tenge on KASE). Currency. The dollar continues to grow in an upward channel against the tenge. Today, the USDKZT pair is testing the level of 486 tenge, which is the maximum of September 2023 in the forex market, and from a technical point of view, this level is important for medium-term dynamics.