Our Comments and Expectations
Global Market Overview. After opening lower, S&P 500 stocks regained most of their lost ground throughout the session and ultimately closed with a modest 0.3% decline. The biggest news for the market and global geopolitics was Donald Trump's conversation with Vladimir Putin, in which both leaders agreed to begin negotiations on ending the war in Ukraine. The U.S. president stated that he would "likely" meet with Putin soon in Saudi Arabia. Another significant development came from Bloomberg, which estimated the cost of fulfilling Trump’s demands for European allies to maintain regional stability. The report suggests that these costs would amount to $3.1 trillion over the next 10 years. Meanwhile, Jerome Powell told Congress that the Fed has made significant progress in fighting inflation, but more work remains to be done. Traders have now pushed back expectations for the Fed’s first rate cut from September to December, while BofA's Brian Moynihan stated that strong consumer spending will likely prevent the Fed from easing monetary policy anytime soon. European indices rose 0.1–0.5%, continuing their steady climb. In Asia, investor sentiment is positive, with indices in Japan, Hong Kong, and South Korea rising steadily. The top performer in the region is the Hang Seng Index, which is currently up 2.2%. Japan’s Producer Price Index increased by 4.2% year-over-year in January, exceeding expectations. Oil is among the biggest losers, dropping below $74 following reports of progress toward peace in Ukraine. According to the EIA, U.S. crude oil inventories rose by 4.07 million barrels last week.
Bonds.
U.S. 10-year Treasury yields continued to rise as Powell’s testimony was interpreted as a hawkish signal by investors.
KASE Index.
The KASE index closed down 0.4% yesterday. Despite lower oil prices, today’s session is seeing a generally positive external backdrop.
Stock Market Highlights.
One of today’s key market drivers could be Kaspi, which unexpectedly surged 7.5% on Nasdaq yesterday. The only major news surrounding the company was a repeated report about Vyacheslav Kim acquiring 97.5% of First Heartland Jusan Bank. In response to Bloomberg's inquiry, Kaspi.kz representatives stated that this deal has no connection to the company. Additionally, Kaspi ADS may have been boosted by reports of progress in Ukraine-Russia peace talks.
This rally allowed the stock to break above a medium-term downward trendline and surpass the 50-day moving average, significantly improving its technical outlook. Halyk Bank’s GDRs also saw gains on the London Stock Exchange (LSE), which could help offset yesterday’s 1.6% decline in its shares on KASE.
Currency Market.
A battle is unfolding around the 500 KZT level in the currency market. At the time of writing, the USD/KZT exchange rate stands at 499, but during the session, it could rise to 501. An additional factor supporting the tenge is the sharp strengthening of the Russian ruble following Trump-Putin talks.