Our comments and expectations
External backdrop. The S&P 500 fell 0.3% yesterday, while the Nasdaq dropped 1.4%. Pressure once again concentrated in the tech sector: Alphabet’s earnings heightened concerns about massive AI spending and its impact on cash flows. At the same time, macro data remained strong: US GDP in Q3 rose 3.4% annualized. PCE inflation in September accelerated from 3.4% to 3.6% y/y, with the core reading at 3.1%. Such data limits the scope for Fed easing; however, the 10-year Treasury yield slipped 5 bps to 4.99% amid demand for defensive assets. After the close, results from Amazon and Intel added to the negativity, and this morning the sell-off in tech stocks continued in Asia. In Europe, the Stoxx 600 rose 0.8% and the DAX gained 1.3%. The ECB kept the deposit rate at 2.5%, warning about inflation risks from expensive energy. Brent crude (BRN) fell 0.8% to $110.8 per barrel on hopes of renewed talks to resolve the Middle East conflict.
KASE Index. KASE added 0.27% yesterday to 7911.49 points, posting gains for a third consecutive session. Unlike the previous day, the rise covered most index constituents: seven out of ten closed in the green, though by relatively small margins. The leaders were Kazatomprom (+1.1%), Kaspi (+0.7%) and Halyk Bank (+0.5%). KEGOC and Kcell gained 0.2% each, while BCC and KazMunayGas added 0.1%. Air Astana, Kazakhtelecom and KazTransOil declined moderately. Thus, the local market maintained a moderately positive tone, continued moving up within the local channel, and reached its highest levels since September 15. Trading volumes, however, were at their lowest since October 16.
Index stocks. On KASE, Kazatomprom was the top gainer, but on the LSE it was the underperformer. Moreover, GDR prices rose quite well in the first hours of the session, even breaking above the 50-day moving average, but then reversed lower. Note that prices are still above the previously broken resistance levels, so technically there is still room for upside—especially given that uranium prices continued to rise and reached $92.15 per pound. Uranium ETFs fell 2.2%, but overall also retain chances to continue higher. Taking into account yesterday’s moves, shares on KASE are now priced 1.7% above the GDRs. With Kaspi, the situation is the opposite: the quotes rose confidently and ended up in the same position as Kazatomprom’s GDRs in the prior session—there is a bounce off the 200-day moving average and a break above the downward trend line. The ADSs even ran into the 50-day average, just like Kazatomprom. The currency gap before the session opens is about 2.5% in favor of the ADSs, so today we expect gains in the local market. However, the same question arises as with Kazatomprom—will the quotes be able to break through the 50-day average as well? Solidcore shares on AIX also showed decent growth yesterday without any support from gold.
Currency. The dollar is dropping below 453 tenge in trading today after news of additional transfer volumes from the National Fund, as well as amid a weakening of the DXY dollar index.