Our Commentary and Expectations
External background. Global markets had a successful trading session yesterday amid easing tensions in the Middle East. The S&P 500 rose by 1.1% and now needs less than a 1% gain to reach a new all-time high. The speech by Federal Reserve Chair Jerome Powell regarding the prospects of rate cuts was dovish, which supported positive sentiment in the U.S. market. He stated that if inflationary pressure remains contained, rate cuts are likely to come — sooner rather than later. However, he refrained from pointing to a specific FOMC meeting, citing the strength of the economy and the need to remain cautious. Swap traders have now fully priced in two Fed rate cuts by the end of 2025, with the first step expected in September, which seems much more likely than a cut next month. Tensions in the Middle East remained relatively calm yesterday, with Iran and Israel maintaining their ceasefire agreement. In Europe, the Stoxx 600 and DAX rose 1.1–1.6%, confidently bouncing off their 50-day moving averages. In Asia, markets are also showing gains this morning, although more modest than the previous day. The Hang Seng is up 0.8%, marking its third consecutive session of growth. Other Asian indices are showing more modest increases. Oil prices dropped to $67.1 per barrel by the end of yesterday’s session. In a surprise move (in line with his policy style), former President Donald Trump announced on social media that China may continue purchasing oil from Iran, which could potentially undermine years of U.S. sanctions on Tehran.
Bonds. The yield on 10-year U.S. Treasuries fell to 4.29%, reaching the lowest level since May 7. Corporate bonds posted gains.
KASE Index. The KASE index fell 1.1% yesterday. Quotes dropped to their lowest level since June 18, though we still lean toward continued local consolidation. We expect the market to post a modest gain today — around 0.7% — and remain below the 6000-point mark.
Index stocks. The sharpest decline yesterday was in KazMunayGas shares. In our previous commentary, we noted that Monday’s rise in KMG stock might prove to be a local misstep for buyers — and indeed, the reversal in oil prices triggered a correction. Kazakhtelecom shares also declined by 2.5%, though due to their small weight in the KASE index, the overall impact was limited. The stock itself shows signs of breaking down from a local consolidation that formed after the June 4–9 rally. Kaspi’s ADS shares rose on Nasdaq yesterday — as we previously anticipated. Despite periodic pullbacks, Kaspi remains above its support levels. Most likely, the stock will soon attempt to retest the descending trendline — around the $84 mark.
Currency. The U.S. dollar fell to 518.2 tenge yesterday, which is now below the recently broken trendline on the USDKZT chart (a positive sign for the tenge). As of this morning, USDKZT is trading at 518.5 tenge.