Our Comments and Expectations
External Background. Leading U.S. indices demonstrated a wave-like dynamic during the previous session. The market opened in positive territory, then declined by midday, before rising again toward the end of the trading day, finishing with a modest gain. There were no significant catalysts for large price fluctuations, as investors are focused on the anticipated consumer price index (CPI) data to be released today. The swap market is pricing in a 1% movement in either direction. According to a Bloomberg survey, economists expect core inflation (excluding food and energy prices) to rise by 0.3% in December for the fifth consecutive month, while the overall index is expected to increase by 0.4% month-on-month. This inflation stability will serve as another argument for a prolonged pause in Federal Reserve rate cuts. Meanwhile, the Producer Price Index (PPI) published yesterday unexpectedly declined in December, supported by lower food prices and stable service costs. According to a 22V Research survey, investor sentiment remains more negative than positive—only 29% of respondents believe that the CPI release will trigger a "risk-on" reaction, encouraging purchases of risk assets (stocks and mid- to low-grade corporate bonds). From reports by JP Morgan and Wells Fargo, investors are expecting an increase in profits from trading operations and investment banking. In continental Europe, indices showed neutral dynamics, while the UK’s FTSE 100 fell by 2.5%. In Asia, moderate trading activity was observed in the morning. Oil retreated from three-month highs after news of a preliminary ceasefire agreement between Hamas and Israel.
Bonds. U.S. government bond yields showed a slight decline yesterday. Emerging market bonds bounced back from six-month lows.
KASE Index. After a prolonged growth phase, the KASE index is entering a period of local consolidation. This is a standard market scenario, which typically involves minimal losses during the correction phase.
Index Stocks. Stocks in the index traded mixed yesterday. BCC and KazMunayGas stocks continued to rise. Investors in KMG shares should be aware that with a slight correction in oil prices, KMG’s growth might slow down or show a decline. As for BCC, the growth pace is slowing, but it is still too early to confidently predict the end of the rally. At the market open, Kazakhtelecom showed growth. Given the news background surrounding these stocks, any significant rise could be of interest. Yesterday, Kazakhtelecom announced the completion of the sale of Mobile Telecom-Service LLP to PIH Communication LLC. However, it should be noted that the stocks could return to initial levels by the end of the session. On the LSE, Kazatomprom slightly increased but remains in a broad sideways trend. Kaspi on Nasdaq lost 1.2% and has not yet realized the expected rebound.
Currency. On the currency market, USD/KZT is decreasing for the second consecutive session. In the morning, the dollar is trading around 529.4 tenge.