Our Comments and Expectations
External Background. The S&P 500 rose yesterday ahead of market close, likely on expectations of a favorable budget resolution. However, negotiations stalled, and Democrats blocked the Republicans’ funding package, leading to the first U.S. government shutdown since 2019. Reports indicate that at least 750,000 federal employees risk being furloughed. This morning, S&P 500 futures show a 0.8% decline. Economic news highlights a drop in U.S. consumer confidence in September to a five-month low amid growing concerns over labor market prospects. Job vacancies in August were largely unchanged, and hiring rates were subdued, indicating gradually falling labor demand. European indices also rose yesterday. ECB President Christine Lagarde said there are no serious threats to inflation in the eurozone but called for vigilance. According to Bloomberg Economics, the average annual growth of the global economy over the next decade will be around 3.1%, below the pre-pandemic five-year growth rate of 3.4%. This morning in Asia, Japan’s Nikkei 225 is down, while South Korea’s Kospi is up. Oil is recovering slightly from September 8 lows. API data shows U.S. crude oil inventories fell by 3.7 million barrels last week.
Bonds. Yields on 10-year U.S. Treasuries were 4.15% yesterday. Corporate bonds remained largely unchanged.
KASE Index. KASE remains in a sideways trend. Yesterday, the index fell 0.2%, continuing its subdued movement. Currently, quotations are near the upper boundary of this trend, and we see two scenarios: first, a breakout upward, allowing the market to continue rising; second, remaining in a sideways trend with a probable decline to 7060 points.
Index Stocks. Today’s trading opens positively, with the index up 0.5% and retesting resistance levels. KMG shares rise for the third consecutive session, ignoring the oil decline but factoring in the weakening tenge. Kazatomprom shows a more confident and profitable growth, benefiting from tenge weakness but reacting less frequently to currency rate changes. Uranium trades at $81.9 with little change by the end of last month. Notably, yesterday’s movement of KAP shares on the LSE opposed the dynamics of uranium ETFs URA and URNM, which may lead to slower growth or a slight correction today. The largest decline yesterday was in BCC shares, though this did not significantly impact quotations overall. Народный банк GDR and Kaspi ADS closed neutral yesterday.
Currency. The dollar has been rising for the fourth consecutive session, though momentum slows near the 550 KZT level. On Forex, USDKZT trades at 549.35 KZT. Locally, we expect the 550 resistance level will not be breached.