Our Comments and Expectations
External Background. The S&P 500 fell by 1.6% yesterday despite a positive start to the session. The sell-off hit the technology sector and large-cap stocks particularly hard. Nvidia’s correction deepened to 8.5%, while Broadcom dropped 7.1%, pulling the Nasdaq back to November lows. Donald Trump announced that 25% tariffs on Canada and Mexico will take effect on March 4 (instead of April). U.S. GDP in the fourth quarter remained stable at an annualized rate of 2.3%. The economy continued to grow at a steady pace, while inflation proved to be more persistent than initially expected at the end of 2024. The main driver of growth was consumer spending, which increased by 4.2%. According to the latest survey by the American Association of Individual Investors, the share of respondents expecting stock prices to decline over the next six months increased by 20.2 percentage points to 60.6%, indicating growing pessimism among individual investors. Today, investors are awaiting the release of the Core Personal Consumption Expenditures (PCE) Price Index. European markets also underwent a correction, with the Stoxx 600 pulling back from historical highs. This morning, Asian markets are experiencing an even sharper decline than Western ones. The Hang Seng index in Hong Kong is down 3.1%, the Kospi has fallen by 3.4%, and the Nikkei 225 has dropped by 2.8%. Reports indicate that Trump has announced additional 10% tariffs on Chinese imports, raising the risk of further retaliatory measures from Beijing and escalating tensions.
Bonds. The yield on 10-year U.S. Treasuries rose to 4.3% yesterday. Corporate bonds saw a slight decline.
KASE Index. The KASE index rose by 0.6% yesterday, supported by gains in KazMunayGas and Air Astana shares. From a technical standpoint, the situation remains unchanged—the index is still in a local consolidation phase.
Index Stocks. KazMunayGas shares jumped by 3.7% yesterday. We previously noted that the stock was signaling a rebound, and this scenario can now be considered realized. The company published its 2024 operational report on its website, which may have triggered the rally. We will provide further commentary on the report later. Besides KazMunayGas, Air Astana also showed gains, continuing its recovery after the recent wave of declines. Local peaks and target levels are around 830 tenge. Other stocks remained neutral. Today, KazMunayGas is slightly pulling back, while Kazakhtelecom and Kaspi shares are up by 0.5%.
Currency. The USDKZT pair is trading at 500 tenge per dollar. As we noted yesterday, the current trend indicates the formation of a local “triangle” pattern. On the global stage, the DXY dollar index is rising for the third consecutive session, while the ruble has weakened to 88.28.