KASE shows a moderate reaction to the growth of global markets

Our comments and expectations

External background. The S&P 500 rose 0.75% yesterday and closed near session highs, showing a rise for the fourth consecutive session. The dominance of the technology sector was still present over other index groups, but this advantage decreased yesterday. Among semiconductor manufacturers, some companies declined, for example, Micron lost 3.8% after two major declines in recommendations. Adobe fell 9.1% in the postmarket after the company gave a revenue forecast for the current quarter that did not meet expectations. Among the macroeconomic news, we can note the publication of the producer price index (PPI), which repeated the dynamics of the consumer price index (CPI), released a little earlier. The indicator rose slightly more than forecast in August due to the recovery in the cost of services. At the same time, the categories that are taken into account in the Fed's preferred inflation indicator were restrained. The number of applications for unemployment benefits rose to 230,000 for the first time in three weeks. In Europe, the quotes of the Stoxx 600 and DAX indices showed slightly greater growth, but they lag noticeably behind the dynamics of the rebound from the S&P 500. Yesterday, the ECB cut the deposit rate for the second time this year — by 25 basis points to 3.5% — as expected. The central bank also lowered its growth forecasts to 2026, and Christine Lagarde said the recovery "faces some obstacles." In Asia, the picture is mixed in the morning – Hong Kong's Hang Seng is rising for the third session, but Japan's Nikkei 225 is declining. The IMF said concerns that China's domestic subsidies are fueling its growing trade surplus are misplaced. Oil rose by another 1.9% yesterday, and exceeded the mark of $72 per barrel of Brent. Copper and gold also showed growth.

Bonds. The yield on 10-year treasuries pushed up after earlier in the week reaching the lows since June 2023. Corporate bonds continued their slow growth.

The KASE index. The KASE index showed an increase of 0.1%. Given that foreign markets are now entering a positive zone, the absence of further decline in the local market can probably already be considered a result. We believe that today the growth rate will be higher, but will not exceed 0.4%.

Index shares. Halyk Bank remains the most volatile paper on the local market so far. Being the leader of the decline in the session before last, the shares rose again and became the best in the previous one. Apparently, the proximity to the May lows works as a lift and support level. On the LSE, GDR increased by a similar amount of 1.9%. At the moment, the currency difference between the two types of securities is minimal, and amounts to 1.1% in favor of shares. Kazatomprom also showed growth in the local market, however, for further local investment, it is necessary that the GDR quotes break through the resistance level of $39.4. Kaspi grew well on NASDAQ and gives a hint of growth over the next couple of sessions, until the 50-day moving average level is tested again.

Currency. The dollar turned around inside the session yesterday – declining to the level of 476.2, it further rose to 479.3 tenge. This suggests that the level of the 50-day average still supports the US currency.