Our Comments and Expectations
External Background. The S&P 500 rose by 0.3% yesterday, setting new highs, although the session opened at higher levels and the index declined during trading. The Producer Price Index (PPI) fell by 0.1% MoM in August, with July revised downward; on a yearly basis, growth stood at 2.6%. Some components of this index are used in calculating the Fed’s preferred inflation gauge (PCE), which is especially important ahead of today’s inflation report. The decline in factory inflation reduces the risk of unexpectedly high data, since a combination of labor market weakening and accelerating inflation would be a highly negative signal for markets and a serious challenge for the Fed. Markets expect the core CPI (excluding food and energy) to rise 0.3% for the second month in a row. If the figure comes in lower, it will strengthen expectations of a 0.5% rate cut at next week’s Fed meeting. In Europe, indices showed moderate declines, while the ECB is expected to leave rates unchanged today; analysts do not expect further easing in this cycle. At the same time, the EU announced plans to significantly tighten sanctions against Russia after Russian drones violated Polish airspace, calling it a “serious escalation.” In Asia, Japanese and Korean indices are rising, while mainland China’s CSI 300 is showing a confident rebound despite Mexico’s announcement of plans to impose tariffs of up to 50% on cars and auto parts from China and other countries. Oil prices are slightly down this morning after three consecutive sessions of growth.
Bonds. The yield on 10-year U.S. Treasuries hit the lowest level since April 7 following the PPI release, while emerging market bonds are showing solid gains.
KASE Index. KASE trading has become less volatile: yesterday quotes closed with a slight 0.1% decline, with the maximum deviation in stocks reaching 1.1%. Locally, the index remains in a consolidation phase.
Index Stocks. The biggest decline yesterday was seen in Halyk Bank shares, which pulled back after failing to break through the 380 tenge level. On September 22, the company will hold an EGM where approval of dividends of 21 tenge is expected, with a record date of 00:00 on September 23 and payouts starting September 25. Among foreign-listed securities, Kaspi shares posted the sharpest drop, continuing their downward trend. However, the fact that ADS started to be bought back at the $83 mark can be seen as a positive signal, potentially indicating a reversal or the formation of a support level.
Currency. The dollar is rising for the third consecutive session and is once again testing channel boundaries, though unsuccessfully so far. Notably, the ruble has fallen for the fourth straight session, trading at 85.2 per dollar, which has pushed the tenge higher against the ruble to 6.28.