Our Comments and Expectations
External Background.
The S&P 500 rose another 0.4%, closing at its highest level since February 21, 2025. The Producer Price Index (PPI) increased by 0.1% month-on-month — below Bloomberg's forecast of 0.2%. The data indicates restrained inflation across the board. Continuing jobless claims jumped to the highest level since the end of 2021. In Europe, major continental indices declined by 0.3–0.7%. This morning, markets are reacting to Israeli airstrikes on nuclear facilities in Iran. Donald Trump stated that Israel may strike Iran and that a “major conflict” is possible. Oil prices spiked to $78 per barrel before pulling back to $73.8 — 5.3% above yesterday’s closing level. The oil options market is now pricing in higher volatility due to escalating tensions in the Middle East. JP Morgan noted that in the event of a serious geopolitical scenario, oil prices could surge to $130 per barrel, although their base forecast for 2025 remains in the $60–70 range. The bank also highlighted a recovery in global oil demand after a sluggish spring. However, increased geopolitical tensions are pressuring equity markets: S&P 500 futures are down 1.45%, while indices in Hong Kong and Japan are falling by about 0.9%.
Bonds.
The yield on 10-year U.S. Treasuries fell to 4.36% yesterday and continues to decline amid rising demand for safe-haven assets following this morning’s geopolitical developments.
KASE Index.
The KASE index had a strong session yesterday, finally breaking through local resistance levels. Moreover, it came within just over three points of setting a new all-time high (on a closing basis). Rising oil prices combined with anticipated reinvestment of Kazakhtelecom’s dividends into index stocks are creating a favorable backdrop for the local market.
Index Stocks.
All stocks in the market rose yesterday, except for KazTransOil. Apparently, the previous day’s oil price surge had a positive impact. The current spike in prices due to Israel's strike on Iran has yet to be fully priced in, which creates good chances for the index to update its all-time high for the first time since January 10. As expected, KazMunayGas led the gains, appearing poised to break through the 16,000 KZT level — the ceiling reached during January’s prior rally. Air Astana shares rose by 1.5% despite the suspension of trading of its GDRs on the LSE. Meanwhile, other depositary receipts showed solid performance: Kazatomprom is recovering from recent local losses, Halyk Bank is rebounding from a support level after a correction, and Kaspi on Nasdaq has hit its highest level since May 12, showing local resilience.
Currency.
The currency market has shown little reaction so far to rising oil prices — the USDKZT exchange rate is trading around 511 both on Forex and KASE. Meanwhile, the U.S. Dollar Index (DXY) fell yesterday to its lowest level since March 2022 but is showing signs of recovery this morning.