Our Comments and Expectations
External Background. The S&P 500 rose by 0.5%, reaching new all-time highs. Among the major indices, the Russell 2000 showed the strongest growth — small-cap companies are particularly sensitive to positive economic news. U.S. retail sales saw significant growth in June, easing concerns about a slowdown in consumer spending. Inflation-adjusted retail purchases rose by 0.6% after declining over the previous two months, exceeding nearly all forecasts from economists surveyed by Bloomberg.
At the same time, initial jobless claims data were released: the number of claims fell for the fifth consecutive week by 7,000 to 221,000 — the lowest level since mid-April — indicating continued labor market resilience. The average forecast of economists polled by Bloomberg was 233,000 claims.
San Francisco Fed President Mary Daly stated that it would be reasonable for policymakers to plan two rate cuts this year, emphasizing that the central bank should not wait too long.
In Europe, indices posted solid gains, with Germany’s DAX rising by 1.5%, recovering half of its losses since July 9. In Asia, morning trading showed mixed movement: growth in Hong Kong and slight declines in Japan and South Korea. The Japanese market may experience volatility next week due to Sunday’s upper house parliamentary elections. Market participants say that the ruling bloc losing its majority could destabilize economic policy. S&P 500 futures are up another 0.2% this morning. Oil is climbing toward $69 per barrel.
Bonds. The bond market had a fairly neutral session yesterday. The U.S. 10-year Treasury yield settled at 4.46%.
KASE Index. The KASE index rose by 0.6% yesterday — a strong result that pushed the market to another all-time high and gave a technical signal for continued growth. Export-oriented companies led the gains, likely due to the weakening of the tenge.
Index Stocks. Kazatomprom rose by 2.2%, reaching new highs. We believe this growth is a result of the tenge weakening, as GDRs on the LSE showed no increase and were not supported by uranium prices, which actually fell yesterday to $71.25 per pound. Nevertheless, local purchases of KZAP shares are justified as a hedge against the tenge’s depreciation. The same applies to KazMunayGas shares, though in this case there is also support from rising oil prices, which reached $69 per barrel (Brent). The most notable rally at the moment is in ADS Kaspi, which continued to rise yesterday, confirming a breakout from the downward trendline. The stock now has strong prospects for recovery.
Currency. Yesterday, the tenge hit record lows against the U.S. dollar. This morning on Forex, there is a tug-of-war between buyers and sellers around the USDKZT rate of 536. This suggests external influence — possibly indirect interventions by the National Bank, such as increasing dollar sales from the National Fund. We believe direct interventions would only be used by the regulator as a last resort.