Our Comments and Expectations
External Background. The S&P 500 continues to rise and hit new all-time highs. The main focus was on the employment report — in June, U.S. job growth exceeded forecasts due to a sharp increase in public education sector jobs, which offset weaker hiring in other industries. The total number of new jobs amounted to 147,000, and the unemployment rate fell to 4.1%. Average hourly earnings rose by 0.2% compared to May and by 3.7% year-over-year — the slowest pace since July 2024.
Strong labor market data, on the one hand, calmed market fears about economic weakness, but on the other hand, lowered expectations for an early Fed rate cut. Scott Bessent questioned the central bank’s policy, stating that the yield on two-year Treasury bonds signals that policymakers’ base rate is too high.
Meanwhile, Trump secured the final passage of his $3.4 trillion tax and spending bill. In Europe, the Stoxx 600, DAX, and FTSE 100 rose by 0.5–0.6%. In Asia, Hong Kong’s Hang Seng index is falling this morning after the city’s government spent $3.8 billion on market interventions. Meanwhile, mainland China’s CSI 300 is up 0.7% and at its highest level since March 20. Oil prices slightly declined on news that the U.S. and Iran may hold talks next week. OPEC+ members have begun discussing another production increase of 411,000 bpd in August. U.S. and European index futures are down 0.2–0.3% this morning. Note that U.S. markets are closed today due to a holiday.
Bonds. The yield on 10-year U.S. Treasury bonds rose significantly to 4.28%. Goldman Sachs lowered its Treasury yield forecasts due to expectations of earlier Fed rate cuts. They now project yields of 3.45% and 4.20% on 2- and 10-year bonds by year-end — below previous forecasts of 3.85% and 4.50%, respectively.
KASE Index. The KASE index rose for the fifth consecutive session. Of the ten index stocks, only three ended in negative territory. The session was calm with no signs of high volatility. No stock showed a daily price change exceeding 0.9%.
Index Stocks. The biggest gainer was BCC (Bank CenterCredit), which added another 0.8% and continued setting new highs. KMG (KazMunayGas) shares continued their slow recovery. Kcell shares look promising, signaling a potential breakout from local consolidation. On the LSE, Kazatomprom shares showed the largest gain, despite uranium stocks falling the day before. However, the entire sector seems to be pausing after a recent strong rally. AIRA’s GDRs fell by 1.5% due to weak liquidity.
Currency. The U.S. dollar is gaining on the KASE today, supported by a favorable external background. The USDKZT is trading at 519.6. Yesterday, oil prices began a slow correction, and the U.S. dollar index (DXY) started to rise following the better-than-expected labor market report.