Our Comments and Expectations
External backdrop. Yesterday, the U.S. market experienced a sharp price reversal during the trading session. The S&P 500 fell by 0.8% at the beginning of trading as Trump intensified his rhetoric, threatening to destroy Iran if his 20:00 deadline was not met and insisting that reopening the Strait of Hormuz would be a key condition for ending the war. Tehran suspended ceasefire negotiations with the United States after the president’s social media post. The U.S. attacked military facilities on Kharg Island, while Iran continued strikes across the Persian Gulf. Later during the session, Trump stated that he was conducting tense negotiations. Market experts speculated that the U.S. president might change his tone at the last minute, which helped the S&P 500 return to neutral territory. Those expectations were confirmed early in the morning after it was announced that Trump had agreed to a two-week truce with Iran, provided that the Strait of Hormuz is reopened immediately and safely. This agreement gives both sides time to reach a more long-term ceasefire deal, although it does not fully shift the situation into a peaceful phase. Among other news, Williams from the Federal Reserve stated that core inflation in the U.S. could rise due to the conflict with Iran, but monetary policy remains at an appropriate level. These developments immediately led to a decline in oil prices: Brent is trading well below $100 at $94.5 per barrel, while U.S. Light Crude fell by 14.8% to $96.4. Futures on the S&P 500 index jumped by 2.5%, breaking above the local downward trendline and continuing their recovery. In Europe, the German index in futures surged by 5.1%, while the Stoxx 600 gained 4.5%. In Asia, the picture is also positive, with major indices rising by 2.8–7%.
KASE Index. Considering the morning news, the local market is expected to show a positive session for most stocks today, except for KazMunayGas and KazTransOil shares.
Index stocks. Yesterday, GDRs and ADSs on Western exchanges declined before they could reflect the positive news. Today, with the opening of the London Stock Exchange, GDRs of Halyk Bank and Kazatomprom are up by 2.7% and 6.1%, respectively. HSBK still remains below the strong resistance level of $33 but may start rising in the coming sessions. Kazatomprom, after gaining 6.1%, has begun to overcome the local resistance level at $81.7; the main and more long-term resistance currently stands at $87.3. We also expect a strong rise in Kaspi ADS later in the evening if the situation does not change before the U.S. market opens. At today’s market opening, the above-mentioned stocks are expected to rise, as well as Air Astana, whose quotes are up by 2.1% and may potentially break upward from the local consolidation.
Currency. Yesterday, the dollar continued to decline at the start of the session. However, the extreme oversold conditions—almost reaching levels last seen on December 3 of last year—encouraged buyers to start purchasing dollars from the level of 458.7 tenge. This morning, the dollar is rising by another 1.7%, reaching 475.8 tenge. It should be noted that horizontal resistance levels remain around 480 tenge.