Our Comments and Expectations
External background. The U.S. market posted a solid rebound, hitting new all-time highs and fully recovering from the August 1 decline. The S&P 500 rose 1.1%, the Nasdaq gained 1.3%, and the small-cap Russell 2000 index jumped 3%. The growth was triggered by the Consumer Price Index report, which, although showing that U.S. core inflation accelerated to its highest level since the start of the year, indicated that moderate growth in goods prices eased concerns about tariff-driven pressures. The reading came in at 0.3%, in line with economists’ forecasts, as was the monthly headline CPI. Market participants interpreted the inflation dynamics as more comfortable than previously expected. Combined with a weakening labor market, this reinforced expectations of a Fed rate cut: the swaps market now prices in a 90% probability of a 0.25% cut in September, up from 80% earlier. Bessent, in an interview with Fox, even suggested considering a 0.5% cut next month. Trump stated he may sue Powell over the Federal Reserve headquarters reconstruction. In Europe, indexes were again neutral: in the UK, the labor market stabilized after previous declines, while in Germany the ZEW economic sentiment index dropped sharply to 34.7 from 52.7 a month earlier. This morning, Asian markets are showing strong gains, especially the Hang Seng and Nikkei 225 indices. The MSCI All Country World Index rose 0.2%, setting a new all-time high, while the Cboe VIX volatility index fell to its lowest level since December. Oil is trading at $66, with OPEC raising its 2026 oil demand forecast and lowering non-OPEC supply growth, signaling a tightening supply-demand balance; OPEC’s outlook is notably more optimistic than the industry average.
Bonds. The yield on 10-year U.S. Treasuries was little changed at 4.29%.
KASE Index. The KASE index again hit new highs yesterday, but for the third time failed to post a 2% gain. A shadow on the daily candle suggests a potential pause in the uptrend.
Index components. Air Astana shares showed the strongest gain yesterday, continuing their rise after the release of quarterly results and forming a new local growth wave within the ongoing sideways trend. BCC shares added 1.5%, though their growth momentum—like that of the index overall—is slowing. These shares now account for 16.4% of KASE’s structure, making them the most influential on index performance. Kazakhtelecom shares rose 1.8%, hinting at a possible upward breakout from consolidation. On the LSE, Halyk Bank GDRs gained 2.6%, breaking resistance levels, exiting the sideways trend, and setting new highs. Kaspi ADS rose 1.4%, marking their fourth consecutive gain.
Currency. This morning, the dollar is falling to 537 tenge, breaking above the trendline on the USDKZT chart. This move likely signals a shift into a deeper phase of the sideways trend after an unsuccessful attempt to break the 544 tenge resistance level.