Our Comments and Expectations
External Background. The S&P 500 rose by 3.3%, more than twice the increase projected by index futures yesterday morning. Almost all sectors on the index map saw gains, except for defensive utilities and some telecom companies. In a carefully coordinated joint statement, the U.S. cut tariffs on Chinese goods from 145% to 30% for a 90-day period, while Beijing reduced tariffs on most goods to 10%. Representatives from major Wall Street companies noted that investors had not expected such a significant tariff reduction. However, negotiators still face a number of “hurdles” in turning the short-term deal into a long-term agreement.
Swaps tracking upcoming central bank meetings showed only 56 basis points of easing expected by December, compared to nearly 75 basis points last week. Traders still anticipate the first quarter-point rate cut in September. Federal Reserve Governor Adriana Kugler said the Trump administration’s tariff policy would likely lead to increased inflation, even with the newly announced tariff reductions for China.
This morning, S&P 500 futures have cooled, dropping by 0.3%. In Asia, the Hang Seng Index is down 1.5% after a 3% gain yesterday. Mainland China’s CSI 300 is up slightly by 0.2%, while Japan’s Nikkei 225 rose 1.43%. European index futures show modest gains of 0.2–0.3% for the Stoxx 600 and DAX. Brent crude is trading flat, just below the $65 per barrel mark.
Bonds. The 10-year U.S. Treasury yield is approaching its April 11 high. Yesterday saw strong gains in U.S. bonds with non-investment grade ratings.
KASE Index. The KASE index failed to follow the positive momentum of Western markets yesterday. One of the negative factors was Kaspi’s earnings report, which showed a downgrade in sales guidance.
Index Stocks. Kaspi shares fell by 7.7% on Nasdaq and are down another 6% today on the Kazakhstan market open. In its Q1 report, the company posted a 14% YoY increase in net profit (254 billion tenge), but a 20% QoQ decline due to a strong Q4. Gross merchandise volume (GMV) in the Marketplace segment grew 25% YoY or 20% excluding the Turkish marketplace, which was below the earlier 25–30% growth forecast for 2025. As a result, management revised the forecast down to 15–20% including the Turkish business. The revision was attributed to new smartphone import rules in Kazakhstan and increased macro-level uncertainty. A detailed analysis and updated recommendations/target prices are expected in the full report.
Meanwhile, Air Astana shares led the gainers on the local market (+2.3%). Halyk Bank’s shares and GDRs also rose significantly. We note that these securities handled the recent dividend adjustment quite smoothly.
Currency. The tenge is strengthening against the U.S. dollar, likely due to the tax period and rising oil prices. However, we do not see a strong rally in oil prices — it’s more of a recovery. In addition, the U.S. dollar is strengthening globally. These factors could lead to weakening of the tenge in the second half of May.