Our comments and expectations
External Background. The S&P 500 rose 1.1% on Friday and is quite close to its historical highs. The main driver of the increase was Jerome Powell's speech in Jackson Hole on Friday. Although the market had already priced in a 100% chance of a rate cut in September before the symposium began, investors continued to embrace growth after the Chairman confirmed all dovish expectations. The Fed Chair acknowledged recent progress in the fight against inflation and then stated that he sees sustainable economic growth rates, instilling confidence after recent market fluctuations. He also emphasized the cooling labor market, which was interpreted as an indication that the Fed will do everything possible to avoid a pronounced slowdown. On the other hand, Powell's speech did not contain any specific discussion of the endpoint for rates at the end of this easing cycle or the pace of rate cuts along the way. All S&P 500 groups showed growth. In Europe, the Stoxx 600 rose 0.5%, and the DAX increased by 0.8%, reaching highs not seen since July of this year. In Asia, the Hang Seng Index broke through its 50-day moving average upward this morning, which is a fairly positive technical signal. Quotes also reached highs not seen since July. Japanese and Korean indices are slightly down. The MSCI World Index reached an all-time high. Oil prices are rising and recovering to around $78 per barrel for Brent. Other commodity prices were also up.
Bonds. The yield on 10-year U.S. Treasuries fell to 3.8%. ETFs for corporate bonds continued to rise after a one-day pause.
KASE Index. The KASE index closed slightly down by 0.1% on Friday. However, the market may benefit today from the decent growth of our GDRs and ADS.
Index Stocks. The largest growth on the local market on Friday was shown by Kazatomprom shares, which also led among GDRs, jumping by 6.8%. The company released its report for the first half of the year, showing expected revenue growth due to high uranium prices. On the other hand, margins slightly decreased due to a continuing sulfuric acid shortage. Notably, this led Kazatomprom to reduce its production forecast for next year to 25,000–26,500 metric tons of uranium, down from the previous 30,500–31,500 tons, which we believe could have contributed to the GDR growth. As a result, we slightly raised the target price for KZAP shares to 24,600 tenge, with a growth potential of 34%. It’s worth noting that uranium funds URA and URNM rose by 7.8% yesterday, while the metal's price increased by 1.75% to $81.3 per pound. Kaspi rose by 2.6% but still remains below the 50-day moving average.
Currency. The dollar is showing a more moderate trend against the tenge today than it did on Friday. The USD/KZT exchange rate is trading around 483.8 this morning.