Our comments and expectations
External backdrop. The S&P 500 fell 0.2% yesterday, snapping a four-session winning streak. Equities were pressured by developments in the rates market: U.S. Treasury yields climbed again during the day. However, strong demand at the $39 bn 10-year auction helped halt the sell-off, and by the close the yield had returned to around 5.28%. The minutes of the Fed’s September meeting showed that most participants see another rate hike by year-end as likely due to persistent inflationary pressure. In Europe, the decline was more pronounced: the Stoxx 600 lost 1%, the DAX 1.4%, and the FTSE 100 0.8%. Selling in government bonds spread to other eurozone countries as well, and bank stocks were among the biggest losers. Investors were concerned about potential bank losses on government bond holdings and the impact of higher borrowing costs. Brent fell 0.4% on Wednesday to $100.2 per barrel, but this morning it climbed again to about $102.3 amid intensified attacks on shipping in the Persian Gulf. Negative sentiment prevails in Asia against the backdrop of rising oil prices and instability in the rates market. The Nikkei is down 1.4%, the Kospi 2.6%. Morning reports say Broadcom intends to raise $50 bn and SpaceX $40 bn, heightening concerns about rising leverage among technology companies. S&P 500 futures are down about 0.2%.
KASE Index. KASE rose 0.3% yesterday, mainly thanks to BCC shares, whose gains offset declines in Kaspi and Halyk Bank. During the session the index climbed above 7,900 points, but it failed to hold most of the intraday advance. Trading volume in index constituents increased 24.4x to KZT 18.8 bn. Almost 97% of this turnover came from specialized trading in BCC share buybacks.
Index stocks. BCC was the main gainer, up 3.8% to KZT 5,066. On the same day, the bank completed the repurchase of 4.13 mn of its own shares for KZT 18.2 bn. The specialized trading took place at KZT 4,399 per share, significantly below the market close, making it difficult to view yesterday’s rise as an unambiguous signal for a continuation of the uptrend. Nevertheless, the shares closed at their highest levels since last November, and if they do not pull back today, from a technical perspective this would be a positive signal. Kaspi fell 1.4% on KASE; its ADS on Nasdaq also lost 1.4%, ending the session at $91.87. Halyk Bank shares declined 1.1%, and its GDRs on the LSE fell 2.2% to $32.65. Kazatomprom on the local market gained 0.3%, but its GDRs slipped 2.4% to $64.9. Here, the negative move was accompanied by selling across the uranium sector, which, despite earlier positive technical signals, failed to extend gains. Solidcore, by contrast, rose 0.8% to $13.1 despite a 1.6% drop in gold. Note that on AIX, prices are now showing signs of leveling off.
FX. USDKZT is showing a slight rise today after two consecutive sessions of declines. The current position of quotes suggests that in the coming weeks the pair may consolidate near the 450 tenge level, with a fluctuation range of about ±10 tenge.