Our Comments and Expectations
External Background.
The U.S. market was closed yesterday in observance of Freedom Day (Emancipation Day). This morning, S&P 500 futures are down 0.25%. White House Press Secretary Karoline Leavitt stated that President Trump will decide within two weeks whether to provide military support to Israel in its conflict with Iran. Yesterday, Israel launched several more strikes on Iran’s nuclear facilities and warned that its attacks could lead to the collapse of the Iranian leadership. During a phone call with Putin, Xi Jinping called for a ceasefire in the Middle East. Trump continued to criticize Fed Chair Jerome Powell, reiterating that interest rates should be cut by 2.5 percentage points. Lawrence Summers noted that Trump has likely already selected a candidate to replace the current Fed chair. In Europe, DAX futures are up 1.3%, rebounding from the 50-day moving average. Stoxx 600 futures are also gaining about 0.7%. The Bank of England kept its key rate at 4.25%. While this was expected, more committee members voted for a rate cut than previously anticipated. In Asia, markets are showing moderate growth: the Hang Seng Index in Hong Kong is rising, and a strong rally continues in South Korea. In Japan, the core consumer inflation indicator accelerated to a new two-year high.
Oil rose to $79 per barrel yesterday but is correcting to $76.9 today.
Bonds.
The yield on 10-year U.S. Treasuries is trading at 4.37% this morning.
KASE Index.
The KASE Index rose another 0.3% yesterday, extending its growth streak to seven sessions. The current wave, which includes 12 rising sessions and only one decline, has added 8.2% to the market. However, yesterday’s performance and today’s negative opening point to local exhaustion of the rally.
Index Stocks.
Yesterday, only KMG shares showed notable growth, adding another 2.4%. While Trump considers joining the Israel-Iran conflict, oil may attract new bulls, which positively affects KMG’s price. However, the lack of movement in other stocks suggests a slowdown following the recent strong rally. At the open today, the KASE Index is down 0.6%, mainly due to KMG (-1.1%) and a decline in Air Astana shares following the shareholder register record date. Since the key resistance level of 800 KZT has not been breached, the stock remains within a sideways trend. For GDRs, the updated record date is set for June 23, and the dividend amount is $0.428725 (excluding any potential taxes or fees).
Currency.
Today, the dollar has broken above 520 KZT, which is a technical signal for further growth. The next target for USDKZT is 524 (the April high), followed by 530 (the historical high).