Our Comments and Expectations
External Background: The S&P 500 rose by 1.1% on Friday. This jump allowed prices to return to the levels of the 50-day moving average, essentially marking a return to an upward trend. According to the trading volume chart, Friday's volume reached the highest levels since 2016, driven by the quarterly event known as "Triple Witching," which saw the expiration of options worth $6.5 trillion. The Republican-controlled House of Representatives rejected a temporary funding plan backed by Donald Trump to avoid a government shutdown, while President Biden signed a funding bill to keep the U.S. government operating until March 14. The Federal Reserve's preferred inflation measure, the PCE deflator, decreased in November, while the core PCE index increased by just 0.1%, which was below expectations. Personal expenditures rose by 0.4%, also lower than forecasts. This soft report, along with the resolution of the nervous situation around U.S. government funding, gave investors some relief at the end of a tense week. Meanwhile, the European Stoxx 600 continued to decline, approaching the lows of November 20. Trump threatened the EU with tariffs unless the bloc increased its purchases of U.S. oil and gas. The U.S. is currently supplying about 16% of the EU's energy needs and is seen as a clear candidate to replace some of the 18% supplied by Russia. Retail sales in the UK for November fell short of expectations. In Asia, all major indices are rising this morning. The biggest gains are observed in Japan and Korea, with more moderate growth in China. Oil is trading at $73.2 this morning, staying within the broad triangle pattern. According to JPMorgan, in 2025, oil markets will shift to a significant surplus of 1.2 million barrels per day. The average forecast price is $73, and it is expected to drop to $61 by 2026.
Bonds: U.S. 10-year Treasury yields fell after the release of the PCE data. Emerging market bonds saw a rise. Chinese government bonds are experiencing a rally: the yield on one-year bonds dropped by 17 basis points to below 1%, reaching the lowest level since 2003.
KASE Index: The KASE index had a quiet session on Friday, showing a 0.1% increase. The market gives us a hint that it may hold above the 5500-point mark, allowing for a breather.
Index Stocks: The biggest gainers on the local market were Kcell and KEGOC stocks. For Kcell, the growth did not significantly alter the overall picture, except for halting the local downward wave. However, for KEGOC, a rise of more than 1% is a rare event. Prices have fully recovered to the levels preceding the dividend gap on October 23. The market’s biggest underperformer was Air Astana, which dropped 1.1%. This is not critical, but during the session, the stock price fell below 800 tenge with higher volumes, indicating a large sale. Among foreign depository receipts, ADS Kaspi led, pausing in its downward wave.
Currency: The currency market remains unchanged – USDKZT is firmly holding the resistance level at 525 tenge. On Friday, the dollar (DXY) retreated after rising for most of the previous week.