Our comments and expectations
External Background. The S&P 500 rose by 1% yesterday, surpassing the levels that were seen before the last decline on August 1 due to the labor market report. The index is now just a little over 1% away from reaching its historical highs of 5639 points. From the local bottom, the index has already increased by 9.5%, and the current series of gains spans 8 consecutive sessions of growth. Scott Rubner from Goldman Sachs expects this trend to continue over the next four weeks. Federal Reserve representative Mary Daly stated that she has “more confidence” that inflation is under control. Neel Kashkari expressed the opinion that a softening labor market should open the door for interest rate cuts in September. Among other economic news, a survey by the New York Fed indicated that the proportion of Americans believing they are likely to become unemployed in the next four months reached a record level of 4.4%. In Europe, indices are also showing a strong wave of growth. The Stoxx 600 rose by 0.6% and managed to break through its 50-day moving average. The DAX and FTSE 100 indices showed similar results. Emerging markets grew by 0.9%. In Asia, the Japanese and Korean markets are rising, while the Chinese market is declining moderately, reflecting the previous session's trends. Oil fell by 2.5% to $77.7 after Anthony Blinken stated that Benjamin Netanyahu accepted a “transitional agreement” for a ceasefire in the Gaza Strip. The next significant step in the political process is expected to be Hamas's agreement.
Bonds. The yield on US 10-year bonds yesterday was 3.87%. Bond ETFs are rising strongly, with EMB and HYG reaching their highest levels in the past two years.
KASE Index. The KASE index fell yesterday for the first time after six consecutive sessions of growth. Investors are awaiting reports from major companies scheduled for this week.
Index Stocks. BCK and Air Astana saw a decline of 1.1% yesterday, but they are recovering part of their losses today at the opening. Yesterday, the National Bank released its report, which we will evaluate later after the conference call scheduled for today at 19:00 Astana time. Meanwhile, we have downgraded our recommendation on KEGOC shares from Buy to Hold, following a neutral second-quarter report. The company continues to show revenue growth after reforms in the energy sector and tariff increases. However, the quarterly gross margin slightly decreased, and the EBITDA margin significantly contracted, leading to a modest increase in cash flows in the second quarter.
Currency. The dollar has been slowly declining in four of the last five sessions. This morning, it is trading at 477 tenge, which may be the result of the tax period's influence or the overall weakening of the dollar in the global market recently. Reports indicate that the index of emerging market currencies has risen to a record high as investor appetite for riskier assets has increased ahead of the Fed symposium in Jackson Hole, which will take place later this week.