Our comments and expectations
External environment. The S&P 500 closed yesterday up 0.3%. The session started on a weak note after Iran’s Tasnim news agency reported on Monday that Tehran would suspend exchanges with the United States in protest against Israel’s ground offensive in Lebanon. Oil rose by 3%. However, the market later moved into positive territory following Donald Trump’s comments that negotiations are progressing well. According to Goldman Sachs, hedge funds last week bought U.S. equities at the fastest pace in six months. U.S. manufacturing activity in May grew at the fastest rate in four years, driven by an increase in new orders and production. At the same time, the Institute for Supply Management report showed that input costs for manufacturers continue to rise sharply. Bloomberg believes these data strengthened expectations that the Fed’s next move on interest rates could be a hike. In Europe, indices closed slightly lower yesterday. In Asia this morning, Hong Kong and Chinese indices are rising, with the Hang Seng up nearly 2%. It was reported that China’s manufacturing activity slowed in May: the official manufacturing PMI fell to 50 from 50.3 in April, in line with expectations. Oil is declining today after yesterday’s increase and is trading around $94 per barrel. S&P 500 futures are currently down 0.2%.
KASE Index. The KASE index again showed a neutral session yesterday. Constituents also posted moderate performance, indicating that the market is entering a local consolidation phase.
Index stocks. The top gainer was KazTransOil, confirming previously observed bullish signals. Including today’s session, the stock has been rising for three consecutive days after breaking out of a local consolidation range. At the open today, it is up another 1.5%. The biggest decline was seen in Halyk Bank GDRs on the LSE, which lost 3%. This can be seen as a continuation of the recent failed test of the 50-day moving average. However, it did not bring major technical changes. At today’s open, the biggest decline is in Kazatomprom shares, down 1.1%. We assessed its latest report as moderately negative: revenue grew slightly, but margins deteriorated year-on-year. The quarter ended with a net loss, largely due to the sharp strengthening of the tenge. At the same time, capital expenditures increased significantly, leading to weaker cash flow. The target price is set at 38,200 KZT.
Currency. Yesterday’s session was ultimately successful for the U.S. dollar — USDKZT rose to 490, the highest since March 10. Today, the dollar is cautiously testing the next threshold — the 200-day moving average. The Russian ruble is also weakening, with USDRUB trading at its highest level since May 19. Today, the National Bank announced that in May it sold $500 million from the National Fund, and plans to sell a smaller amount of $200–300 million this month.