Our Comments and Expectations
External backdrop. An interesting picture emerged in the U.S. market yesterday. The S&P 500 closed flat despite Brent crude falling to its lowest level since February 27, effectively returning to pre-conflict levels seen before tensions escalated in the Persian Gulf.
The bond market reacted more noticeably to the decline in oil prices. Yields on both 2-year and 10-year U.S. Treasuries moved lower, apparently reflecting growing expectations that the Federal Reserve may eventually adopt a more accommodative policy stance.
Meanwhile, commodity markets saw declines in both copper and gold prices, which remained under pressure from a strong U.S. dollar that has yet to respond to falling Treasury yields.
JPMorgan stated that U.S. equities are moving closer to its “bullish” scenario. The investment bank raised its year-end target for the S&P 500 to 7,800 points.
On Thursday, investors will focus on the release of the PCE price index—the Federal Reserve’s preferred inflation gauge. Consensus forecasts suggest that the Personal Consumption Expenditures Index accelerated on both a monthly and annual basis in May.
After the close of the regular trading session, the market and the technology sector received support from Micron, which issued stronger-than-expected sales guidance.
Shares of the largest U.S. manufacturer of memory chips surged 15.8% after the company forecast quarterly revenue of $50 billion, well above the market expectation of $43.2 billion.
Markets are recovering this morning. S&P 500 futures are up 0.8%, while Nasdaq futures have jumped 2.2%.
In Asia, Japan’s Nikkei 225 and South Korea’s Kospi advanced by 4.6–5.4%, while the MSCI Emerging Markets Index gained 1.6%.
Hong Kong’s Hang Seng remains the weakest performer, having declined in six of the past seven trading sessions.
Oil prices are attempting to move below $73 per barrel this morning.
KASE Index. The KASE Index closed unchanged yesterday. Most constituent stocks posted modest gains, but these were offset by weakness in Halyk Bank shares.
No stock gained or lost more than 1%, making this another session characteristic of the typically quiet summer trading period.
At today’s market open, the index is up 0.4%, driven primarily by gains in Kaspi shares.
Index constituents. Kaspi’s ADSs on Nasdaq surged 2.8% yesterday.
From a technical perspective, this represents a stronger signal for continued upside, as the shares broke above resistance at the 50-day moving average.
The only concern is the relatively weak daily candlestick, as the stock failed to close near its intraday highs around $88 per ADS.
Halyk Bank’s GDRs gained 1.5% after testing the 200-day moving average for the second time.
However, the shares have yet to generate enough momentum for a decisive rebound from this key support level.
At today’s market open, Kaspi shares are up 2.5%.
KazMunayGas is posting a more modest gain of 0.7%, while Kazakhtelecom is down 0.5%.
Interestingly, the two stocks continue to display mirror-image price movements within well-established trends.
Currency. The USD/KZT exchange rate has gradually declined to the KZT 485 level, where it is currently testing support at the 100-day moving average. From a broader perspective, however, these movements remain relatively insignificant.