Our comments and expectations
External background. The S&P 500 was in positive territory at the start of the previous session, bouncing higher off the 50-day moving average and getting support from falling oil prices. However, almost immediately quotes pulled back to the opening levels and finished trading near those levels. The energy sector, as well as the chipmakers and semiconductor sub-sector, ended in the red. Nvidia fell 5% amid a series of AI deals totaling more than $750 bn. ASML Holding shares declined after reports that a Chinese state-owned company is producing certain types of chipmaking equipment that could threaten its sales. Nervousness in the markets is intensifying ahead of major companies’ earnings reports and the Fed meeting on Wednesday. The regulator is expected to keep interest rates unchanged, but the probability of a hike is now higher than it has been in a long time. In Europe, the DAX was again among the growth leaders, adding 1%. This morning sentiment in Asia is negative again: the Japanese and Korean markets are reacting sharply to sell-offs in the semiconductor sector, and the Kospi is down as much as 10% at once. Oil is trading slightly above $85 per barrel. Trump said that the US and Iran are holding diplomatic talks aimed at ending the conflict and that there is a “good probability” of reaching a deal, but warned that both sides would return to hostilities if the talks do not result in an agreement. S&P 500 index futures are down 0.35%.
KASE Index. There were no significant moves on the KASE yesterday. Trading volume fell to its lowest level since June 19. Only Kazatomprom showed a price change of more than 1%, with its shares declining despite the GDRs rising on the LSE.
Index stocks. While Kazatomprom lost 1.3% on the local market, quotes on the LSE rose by as much as 3.7%. The divergent movement in this case can be explained by the fact that the shares on the local market were initially priced higher. Following yesterday’s session, the shares and GDRs are now priced the same, taking into account the current USDKZT exchange rate. From a technical standpoint, no significant changes occurred after this rise: the GDRs found support at the $64.4 level and bounced, but still remain within a downward trend. People’s Bank GDRs rose 1.3% and held above the 50- and 100-day moving averages. A similar situation is observed for Kaspi ADS on Nasdaq: quotes have risen over the last two sessions and remained above the moving averages.
Currency. The dollar fluctuated during the session yesterday, but still closed without significant losses. This morning, USDKZT quotes are attempting to rise, reaching 477 tenge and testing resistance around the 50-day moving average. Given Bank of America’s recent bearish comments on the tenge and the rate cut, the probability of an upside breakout still remains.