Our Comments and Expectations
External Background.
The S&P 500 declined again — down 0.8%. Market concerns are growing over potential direct U.S. involvement in the Middle East conflict between Iran and Israel. Trump published a demand for Iran’s “unconditional surrender” and warned of a potential strike on the country’s leader, Ayatollah Ali Khamenei. Meanwhile, U.S. retail sales fell for the second month in a row. Industrial production dropped, and homebuilder confidence fell to its lowest level since December 2022. Today’s focus is the upcoming Fed meeting, where no rate change is expected in June or July. However, Jerome Powell’s speech may offer more insight given the recent economic data. Meanwhile, a Bank of America fund manager survey showed that global equities are expected to outperform U.S. equities over the next five years. 54% of asset managers believe international stocks will be the top-performing asset class, while only 23% favor U.S. stocks. In Europe, the Stoxx 600 and DAX declined by 0.9–1.1% and are currently in a downward phase. Reports suggest the EU has canceled a key economic summit with China due to a lack of progress on trade disputes. In early trading, Hong Kong’s Hang Seng is down 1.3%, entering a local correction phase. Futures for the S&P 500 are up 0.2%. Oil rose to $76.5 yesterday and is currently trading around $76 per barrel. According to Citi, gold could fall below $3000 in the coming quarters.
Bonds.
The yield on 10-year U.S. Treasuries declined following Trump’s statements. According to Bloomberg, global bond market volatility is easing, which could make bonds more attractive than equities.
KASE Index.
The strong upward trend in the KASE index continues — over the last 11 sessions, the index has only declined once.
Index Constituents.
The market remains strong amid rising oil prices. Notably, Kazakhtelecom has promised to complete dividend payments by June 18 — this may lead to reinvestment into other index names. The top gainer on the LSE was Halyk Bank, despite the absence of specific news. On the local market, its shares rose 3.2%, beginning to test the upper boundary of the triangle pattern formed since April. We believe the price may break out, which would be a positive technical signal. If the breakout occurs, the next target is 310 KZT, followed by historical highs near 314 KZT. Bank CenterCredit continues its long-term rally, regularly setting new record highs. The uranium sector has shown reduced activity: uranium prices fell 1.3% yesterday, and URA and URNM ETFs dropped by 1.2–1.3%. Kazatomprom closed flat on the LSE. Air Astana is testing previous local highs at 770 KZT.
Currency.
The U.S. dollar has strengthened against the tenge for five consecutive sessions and continues to rise this morning. At the moment, USDKZT is trading at 518.5.