Our comments and expectations
External backdrop. US indices started October with a modest gain following a volatile session: the S&P 500 added 0.2%, snapping a three-day losing streak, while the Dow and Nasdaq closed virtually unchanged. In the morning, the market was weighed down by another sell-off in the bond market, and Treasury yields hit multi-year highs. By the close, yields retreated, allowing indices to recoup losses. ISM manufacturing data and jobless claims came in strong. Oil rose by about 4%, and the December Brent contract closed around $102 on reports that China had suspended part of its petroleum product exports. In Europe, the sell-off was harsher: the Stoxx 600 fell 1.3% to its lowest level since June, with banks underperforming. The yield on French 10-year bonds climbed to its highest level since 2002 ahead of the presentation of the 2027 budget. The key event today will be the September US labor market report: consensus expects employment to increase by about 85 thousand with unemployment at 4.1%. Since morning, Asian markets are mostly down: the Nikkei is losing about 1%, while the Hang Seng is falling nearly 3%. US index futures are slightly higher, and Brent is holding around $102 on reports of the deployment of a third US aircraft carrier to the Middle East.
KASE Index. KASE closed yesterday down 0.4% amid declines in eight stocks, although most of those declines were small. The index slipped below local trend support, and given the sharp drop in depositary receipts abroad, today the decline is likely to accelerate. The next local support could be the 7650-point level.
Index stocks. The steepest decline abroad was posted by the People’s Bank GDRs, which fell 4.4% amid a weak performance by Europe’s banking sector, down 3.7%. Despite such a sharp drop, the overall long-term uptrend remains intact. On KASE, the shares fell only 0.9%, bringing the equity price premium to 3.3%. Kaspi.kz ADSs fell 2.1% yesterday, holding right at the boundary of the ascending trend line. The next few days’ performance will be decisive. The premium in the shares reached 4.5%, which will likely lead to a drop in the tenge price. Kazatomprom GDRs fell only 0.5%, although they rose noticeably intraday. Uranium stocks still cannot confidently rebound from the ascending trend line, and the struggle between bears and bulls continues. However, renewed pressure on Kazatomprom shares should be expected, as the price gap reaches 4%. On the positive side, we note a slowdown in annual inflation from 9.8% to 9.3%, which was quite expected given last year’s high base.
Currency. USDKZT rose 1% yesterday to 444.56. The rate bounced off the support level and is trying to закрепиться above the local level of 444 тенге, which could lead to a rise toward 452 тенге. The National Bank is clearly signaling that current levels are low, having bought $986 mln of FX from the market in September to replenish the UAPF portfolio.