Our Comments and Expectations
External Background. The S&P 500 failed for the second consecutive session to update its all-time highs. Recently, Trump has intensified pressure in trade negotiations — last week he threatened to impose 35% tariffs on certain Canadian goods and announced he is considering implementing 15–20% tariffs for most trade partners. Over the weekend, the U.S. President announced a 30% tariff on goods from the European Union and Mexico starting August 1.
Meanwhile, Bank of America reports that client feedback suggests most investors expect second-quarter earnings to beat forecasts, leading to a short-term rise in stock prices before a decline toward year-end. Citigroup, on the other hand, expects global equity growth to slow over the next 12 months.
The next key market event is the release of U.S. inflation data on Tuesday. Most likely, the report will show that U.S. consumers experienced slightly faster price increases in June, as companies passed higher tariff-related costs onto them. According to a Bloomberg survey of economists, the core Consumer Price Index is expected to accelerate to 2.9% year-over-year — the first increase since January. Core inflation is projected at 0.3% in June versus 0.1% in May.
On Thursday, retail sales data will be released, with expectations of only moderate growth in June. On Friday, European indexes declined from local highs. Brent oil closed slightly above $70 per barrel, reaching its highest level since the drop on June 23.
Bonds. The yield on 10-year U.S. Treasuries rose to 4.42%. Bonds from emerging markets gave back recent gains following the rise on July 9.
KASE Index. The KASE index lost a minimal 0.1% on Friday, formally ending the growth streak that began on June 27. During this period, the index posted nine consecutive sessions of gains, rising by 4.5%. While Friday’s small decline didn’t create a downward divergence, it’s worth noting that the RSI indicator shows the index has been in overbought territory for some time and reached 81 points on Friday.
Index Stocks. Overall, index stocks didn’t show major price changes during the session. However, there were some notable moves among leading stocks. KazMunayGas declined, failing to extend its rally, while Bank CenterCredit (BCC) shares closed lower than the opening level but still above the previous close. Given Friday’s oil price increase, KMGZ may resume growth today. Kcell shares rose on Friday but remain below resistance levels. Trading volume was elevated for Kazatomprom. Today, we expect a dividend gap due to the shareholder record date being set for July 16 at 00:00. For GDRs, the dividend per share is $2.4736, with the record date set for July 15.
Currency. USDKZT closed Friday at its highest level since April 17. The main triggers for the tenge weakening were a stronger U.S. dollar index (DXY) and increased volatility in the USDRUB exchange rate due to new sanctions-related news.