Our comments and expectations
External Background. The S&P 500 lost 0.9% yesterday. The market is awaiting Jerome Powell's speech on Friday in Jackson Hole. Market participants are strengthening their expectations of a one-percentage-point rate cut by the end of the year, although among asset managers, opinions are not uncommon that the market is overestimating the extent of the cuts over the remaining four months. Susan Collins stated that it will soon be appropriate for the Fed to begin gradual rate cuts to maintain the still-healthy labor market. Patrick Harker and Jeffrey Schmid want to see more economic data. Among the sectors, technology saw a significant decline, with the sector ETF XLK dropping 2.3% yesterday, and leading semiconductor stock Nvidia falling 3.7%. Initial jobless claims in the U.S. matched estimates at 232,000, which is a slight increase compared to the previous period. In Europe, indices showed a small but still positive increase in quotes. It has been reported that the Eurozone economy received an unexpectedly strong boost from the Paris Olympics, which stimulated private sector growth at the fastest pace in three months. The S&P Global Composite PMI jumped to 51.2 in August, exceeding expectations. In Asia, there was moderate activity today. The Japanese Nikkei 225 is up 0.4% despite the hawkish speech by Bank of Japan Governor Kazuo Ueda, who indicated that he is still on track to raise interest rates. Oil prices are rising after falling to their lowest levels since August 6. Gold has dropped below $2500 per ounce. Citi believes that inflows into gold ETFs will “significantly” increase over the next six to twelve months, supported by lower Fed rates.
Bonds. The yield on 10-year U.S. Treasuries rose after two days of decline. Emerging market bonds lost 0.8%.
KASE Index. The KASE index rose by 0.3%, but the transition to a local sideways trend is becoming noticeable. The current earnings season is unfolding without major surprises, resulting in an increase in the number of stocks with a “Hold” recommendation in our coverage list to four.
Index Stocks. Most stocks were in positive territory yesterday. However, this did not have a significant positive impact on local market stocks. The most effective was Kcell, which rose by 1% and once again updated historical highs. Nevertheless, a 1.8% decline at market opening negates this growth. Among GDRs and ADS, there was mostly negative dynamics. The National Bank lost the most (-2.6%) and is now retesting the support of its 50-day moving average. Kaspi dropped by 2.1%, with the 50-day average now acting as resistance, which ADS cannot break through.
Currency. The currency market experienced what we had previously feared and warned about. After several tests of the 480 level, the tenge lost ground, and today there was a breakout on the USD/KZT chart. At the moment, the dollar/tenge is trading at 484.6 on Forex and 484.1 on KASE. The nearest resistance level for the U.S. currency is at 486.