Our comments and expectations
External backdrop. The S&P 500 fell 0.5% yesterday, while the Nasdaq dropped 1.3%. Additional pressure on the tech sector came from a Financial Times report that OpenAI’s annualized revenue was $20 bn below the previously indicated level. Semiconductor makers’ stocks lost 3.4%. Brent rose 4.1% to $104.3 per barrel: alongside supply threats from the Middle East, U.S. output was reduced due to an approaching hurricane. Trump’s statement that he has no plans to attack Iran before the November election only partially restrained the oil rally. U.S. Treasury yields again swung sharply: the 10-year yield climbed to 5.35%, but after a strong $22 bn auction of 30-year bonds it fell to 5.23%. This supported the broad market: about two-thirds of S&P 500 stocks rose, but declines in the mega-cap tech names outweighed that. In Europe, the Stoxx 600 lost 0.8% and the DAX fell 1.2%. The banking sector dropped 2% amid rising yields on European sovereign debt and persistent concerns over France’s fiscal sustainability. Expensive oil simultaneously increases inflation risks and worsens the economic growth outlook. This morning in Asia, Hong Kong’s Hang Seng is the leader (+1.6%). Brent has pulled back to around $102.8. S&P 500 index futures are up 0.33%.
KASE Index. KASE fell 0.75% yesterday, failing to extend the latest upswing. Most constituents posted negative results; only KEGOC maintained a positive performance. During the session, the index dipped to 7,772 points, but recouped part of the losses by the close. Judging by the last two daily candles, the local correction may continue during today’s session as well.
Index stocks. The largest decline was posted by Kazatomprom, which was also the laggard on the LSE, where its GDRs corrected by 3.2%. The entire sector came under strong pressure after a solid rise on October 6. The most notable declines were among developers of new reactors, which may be linked to a reassessment of expectations for building power capacity for AI amid doubts about the revenues of related companies, especially after yesterday’s OpenAI revenue shortfall. Another negative factor may have been the strengthening of the tenge. It is also reported that at the EGM shareholders did not approve the uranium sales contract with Uranium One Group, a subsidiary of Rosatom, but supported the contract with China’s SNURDC. BCC was unable to continue its rise and fell 1.2% after the day-before-yesterday’s high trading volumes due to a special share buyback. The biggest gain was shown by Kaspi ADS, which added 1% and held above the $91 level on Nasdaq.
Currency. USDKZT rebounded to 450 tenge yesterday and is showing moderate volatility today. An AAF survey showed that market participants expect the dollar at 456.5 tenge by the beginning of November and at 502.6 tenge in a year. The one-year forecast was revised from 511.6 tenge. At the same time, 85% of respondents expect a base-rate cut on October 23, and the inflation forecast for a year ahead declined from 10.4% to 9.7%. It is reported that J.P. Morgan assigned Kazakhstan an Index Watch– Positive status ahead of a possible inclusion of tenge-denominated government bonds in the GBI-EM index, which could put additional pressure on the dollar over time.