Our Comments and Expectations
External backdrop. The S&P 500 gained 1.1% yesterday, rebounding after a 1.2% decline the previous day following remarks from new Federal Reserve Chair Kevin Warsh. Trading volume surged to a record level as options contracts worth approximately $7.5 trillion expired. The semiconductor index jumped 6.4%. A key positive catalyst for the market was the implementation of a temporary peace agreement between the United States and Iran. According to Donald Trump, the agreement also involves Lebanon, Hezbollah, and Israel. Shipping activity has resumed through the Strait of Hormuz, the United States has announced the end of its naval blockade, and a 60-day negotiation period regarding Tehran’s nuclear program has begun. Bloomberg data show that 17 vessels were scheduled to pass through the Strait on June 19, a figure close to the highest levels seen since the start of the military conflict. Kuwait expects to restore oil production to pre-war levels within a few weeks. Iran is also prepared to quickly resume oil production and exports, having reduced output far less than other producers affected by the conflict. Meanwhile, oil prices began recovering yesterday after falling below $77 per barrel. Today, Brent crude is trading slightly above $80 per barrel after the United States and Iran postponed the start of negotiations on a peace agreement and restrictions on Tehran’s nuclear program. Equity markets in continental Europe were little changed, although the UK’s FTSE 100 declined by 1%. Market sentiment in Asia is moderate this morning. The CSI 300 and Hang Seng indices are closed for the Dragon Boat Festival. Gold prices have fallen to $4,172 per ounce amid a stronger U.S. dollar and the Federal Reserve’s hawkish stance. Copper prices declined after Donald Trump announced tariffs on metal imports. S&P 500 futures are currently down 0.3%.
KASE Index. The local market is experiencing its fourth consecutive session of consolidation, a trend that is likely to continue today. At the market open, the index is up 0.3%.
Index constituents. Kazatomprom posted the largest decline yesterday, falling 1.5%. Today, those losses are being partially recovered, with the shares gaining 1.3%. The company’s GDRs closed 0.3% higher yesterday and are adding a similar amount at today’s opening. Overall, this price action does not materially change the technical picture on either exchange, as the shares continue to consolidate within a triangular pattern. Price differentials between local shares and GDRs also remain limited. Kaspi’s Nasdaq-listed ADSs declined by 1.3% yesterday. Based on the chart, the attempt to break above the 50-day moving average appears to have failed. However, support levels remain relatively close, leaving room for another test by the ADSs. Solidcore shares on the London Stock Exchange are under pressure as the Federal Reserve’s policy stance weighs on gold prices.
Currency. The foreign exchange market has now experienced eight consecutive sessions of low volatility around the KZT 488 level. Meanwhile, the U.S. Dollar Index (DXY) has risen to its highest level since May 19, while the Russian ruble has weakened to RUB 74 per U.S. dollar.