Our Comments and Expectations
External Background. The S&P 500 closed flat on Friday, despite a favorable news backdrop regarding the U.S. macroeconomic outlook and stronger dovish rhetoric from the Federal Reserve. Fed Governor Christopher Waller stated the need for a rate cut in July, noting no signs of rising inflation expectations — a factor allowing the Fed to proceed with policy easing. Additionally, the University of Michigan’s consumer sentiment data showed the index reached a five-month high in early July, as outlooks for both the economy and inflation improved. Consumers now expect prices to rise by 4.4% over the next year, down from 5% a month earlier. In Europe, major indices also ended the day near neutral. This week, EU representatives are expected to meet to develop an action plan in case of no trade deal with U.S. President Donald Trump. In Asia, major indices are slightly up in morning trading. The Japanese market is closed, but higher volatility is anticipated after the ruling coalition lost its majority in the upper house — marking the first time since 1955 that a prime minister will govern without holding a majority in at least one legislative body. U.S. S&P 500 futures are up 0.1% this morning, Stoxx 600 is down 0.2%, and DAX is down 0.3%. Brent crude oil is trading at $68.6 per barrel.
Bonds. The yield on U.S. 10-year Treasuries declined to 4.43% on Friday. Corporate bonds are recovering after a recent wave of declines.
KASE Index. The KASE index continued its upward movement after breaking out of a local consolidation range. However, some market weakness is reflected in the upper shadow of the daily candlestick, indicating an intraday reversal.
Index Stocks. The stock with the most significant impact on the index’s intraday movement was KazMunayGas. Although it closed flat in the previous session, prices rose as high as 18,018 tenge intraday — likely influenced by oil dropping back below $70 per barrel. The strongest performer among index stocks was Kaspi, which remains our local favorite since breaking its downtrend on July 15–16 on Nasdaq. Air Astana shares also rose, moving back toward the middle of the horizontal range between 700 and 800 tenge. No significant moves were recorded on the LSE or Nasdaq, apart from AIRA. The price action in London mirrors movements on the KASE. Today’s trading opened with a decline in Kcell shares, which had previously approached resistance levels. Shares of BCC and Halyk Bank are showing slight gains and similar dynamics as they attempt to break out of local consolidation.
Currency. The U.S. dollar began reversing as early as Friday’s session and is now down to 528.4 tenge. Negative volatility may persist through the end of the month, but we expect more stable trading and stronger tenge support in August.