Our Comments and Expectations
External backdrop. The S&P 500 jumped 0.7% during the final trading session of last week and the month. Overall, the benchmark U.S. index was virtually unchanged in July, while oil prices rose by just over 23% and the yield on 10-year U.S. Treasury bonds increased from 4.47% to 4.73%. Mega-cap stocks were among the top performers, with Amazon posting the strongest gain (+15.3%), while Apple, by contrast, fell 7.35%.
U.S. consumer sentiment reached a five-month high in July, supported by improving expectations for the economic outlook, while gasoline prices remained below the peaks seen during the period of military escalation. Three Federal Reserve officials who dissented from Wednesday's decision to keep interest rates unchanged warned that delaying measures to combat inflation for too long could require more aggressive action in the future.
According to Bloomberg Economics, the U.S. ISM Manufacturing PMI is expected to increase to 54.2 in July from 53.3. On Friday, President Trump said he was losing confidence in Iranian negotiators, but later announced that new negotiations between the U.S. and Iran would begin on Monday. He also agreed to abandon plans for a large-scale strike on Iran after U.S. allies in the Middle East, including Saudi Arabia, urged him to pursue a diplomatic agreement instead.
Meanwhile, the largest OPEC+ producers agreed to increase production quotas by 188,000 barrels per day in September. This morning, Brent crude is down 8.7% to $83 per barrel following Trump's softer rhetoric. Market sentiment in Asia is generally neutral, with the exception of the volatile Kospi, which has fallen another 5%. China's manufacturing activity unexpectedly contracted for the first time in five months. S&P 500 futures are up 0.6% this morning, reacting positively to lower oil prices.
KASE Index. The KASE Index gained 0.9% on Friday. From a broader perspective, the market remains within a sideways trend; however, this advance represents the strongest signal of a potential continuation of the upward move since June 15. The index broke above a narrow consolidation range that had lasted for three and a half weeks and also moved above its local descending trendline. The next resistance level is located around 7,860 points.
Index constituents. Kazatomprom shares posted the strongest performance, rising 3.7%. This advance somewhat improved the stock's technical picture, although it remains in a well-established downtrend both on the local market and on the LSE, where its GDRs fell 1.2% on Friday despite an attempt to rally to $67.4.
Kazakhtelecom shares continued their strong upward momentum, gaining a total of 8.2% since July 3, apparently supported by news of a significant reduction in the company's office workforce. BCC shares also continued to rally sharply, adding another 3% in the current session to become the top performer. The biggest decline came from Kaspi shares, which lost 1.1%.
Currency. USD/KZT remains below its 50-day moving average. This morning, the U.S. dollar is trading just below the 475 tenge mark.