Our comments and expectations
External background. The S&P 500 grew 0.4% yesterday and 6.5% from the local bottom at 5,186 points (August 5). These inflations have had a negative impact on expectations, strongly changing investor attitudes.Core inflation was 3.2% YoY versus 3.3% last month. The monthly indicator came out by 0.2%, also in line with the market forecast, but was slightly higher than the previous result of 0.1%. Nevertheless, this is the fourth month where there has been a decrease in inflation, which reinforces the expectation that the Fed will cut the rate in September. Swap traders are currently fully anticipating a 0.25% rate cut in September and 1% by the end of the year. The decrease in market anxiety was noticeable in the VIX volatility index, which dropped to 16.2 points. Rafael Bostic announced that he was ready for a September cut, and Ostan Goolsby said that he was more concerned about the labor market than inflation.In Europe, quotations rose by a similar amount. The Stoxx600 and DAX gained 0.4-0.5%, the FTSE 100 rose 0.6%. Eurozone GDP added 0.3% last quarter. In Asia, the leading indexes also show growth, but not more than 1%. Japan's GDP grew by 0.8% last quarter, which was more than expected (0.5%), thanks to consumer spending. In China, economic data showed stabilization, including a slowdown in the decline in house prices and higher-than-expected retail sales. On the other hand, Bloomberg Europe has suggested that the slowdown in investment indicates weakness in the third quarter.
Bonds. The US 10-year yield has reduced the rate of decline, but still continues this process. Quotes dropped to 3.82% yesterday. Corporate bonds rose slightly.
The KASE index. Yesterday's index showed an increase of 1% at once and was able to update historical highs. During the session, quotes rose to 5288.73 points, which is slightly higher than the previous high of 5288.09. Since the result is quite close, we now expect consolidation above resistance levels for confidence, however, we note positive dynamics in the market, which may indicate the start of the August-September rally.
Index shares. All the securities in the index showed growth yesterday, which hints at a positive investor sentiment. However, only 2 securities stood out – the previous growth leaders Kcell and Halyk Bank. Both stocks still look interesting, as they have relatively recently broken through their resistance levels. Air Astana's GDR increased by 2.2% on the LSE yesterday, and by 8% since it stayed in the oversubscription zone from August 5 to 8 (according to the daily RSI). Kazatomprom showed an increase of 1.4%, but this did not change the picture.
Currency. Despite some of our concerns, the dollar did not go above 480 tenge yesterday and in the morning shows a weakening to 478.5. The August tax period has started, from which we do not expect much, but it can still have an impact. The ruble also began to strengthen against the dollar after almost reaching May levels of 94 the day before yesterday.