Our comments and expectations
External Background.
Once again, the S&P 500 attempted to test strong resistance levels near historical highs but ultimately showed neutral results. The sector map of the index displayed mixed dynamics, with the healthcare sector declining while the banking sector continued to rise amid reports that the interest rate cuts would not be critical for bank margins. Investors are currently trying to anticipate what the Federal Reserve's decision will be at today's meeting—whether it will be a reduction of 25 or 50 basis points. Although a 50 b.p. cut is seen as a more positive outcome for stocks, there is a growing sentiment in the market that a larger rate cut might scare investors, leading them to believe that the Fed is rushing to ease policy due to a worse economic situation than the market participants had thought. According to Bloomberg, the market’s assessment of the chances for a 50-basis-point cut stands at about 55%. A global survey by BofA showed that investor sentiment improved for the first time since June ahead of the rate cut. BlackRock believes that markets are seemingly pricing in the cuts as deeply as during previous recessions. Among economic news, U.S. industrial production increased by 0.8% in August compared to the previous month, surpassing consensus estimates. Canada’s CPI rose by 2%, the slowest annual pace since February 2021. In Europe, index prices did not show significant growth but remained in positive territory. Oil rose to $73.7 but experienced a slight decline this morning. Goldman Sachs anticipates that gold may face a slight pullback in the short term if the Fed opts for a 25-basis-point cut tomorrow but will subsequently rise to record levels.
Bonds.
The yield on 10-year U.S. Treasuries rose to 3.65%. Currently, prices are close to the lows of June 2023.
KASE Index.
The KASE index increased by 0.2%, recovering losses from the previous session. For the third consecutive session, quotes have been held back by the 5200-point mark.
Index Stocks.
The National Bank has rebounded to the levels of the sideways channel that existed from June to August. The August rise and subsequent fall of the shares have been fully offset. Air Astana is showing an interesting movement— as noted earlier, there was a bounce after the formation of a daily upward divergence. Soon, the quotes may rise further and begin testing the descending trend line, which will be quite interesting considering the oversold nature of the shares. On the LSE, the biggest decline was seen in Kazatomprom (-4.1%); however, this did not significantly impact the overall dynamics, as the shares have been rising by 2.6% since the opening and remain within a sideways channel in the range of $36-39.4 per GDR.
Currency.
The tenge has strengthened against the dollar for the second consecutive session. Apparently, the 480 tenge mark has lost its strength as a support or resistance level, so we will be focusing more on the 50-day moving average, which is currently at 477.9 tenge on the USD/ZT chart.