Our comments and expectations
External background. The S&P 500 fell 1.6% after Powell's speech, which was the worst daily result since September 21, 2023. This decline was also preceded by a weakly pronounced downward divergence on the 4-hour chart. The Fed kept rates steady and signaled its willingness to ease, but Jerome Powell warned that it was unlikely that the central bank would ease policy in March. The chairman acknowledged that rates had probably peaked, but insisted that the fight against inflation was not over yet. Recall that by the end of December, market swaps had a 70% chance of a rate cut in March, but in recent days expectations have dropped below 33%. From corporate news, we can note the decline of Microsoft and Alphabet after they disappointed investors who bet that the success of artificial intelligence would quickly lead to an increase in results. After the close, Qualcomm provided a revenue forecast that matched estimates. According to ADP, U.S. companies added 107,000 jobs in January, compared with a downwardly revised figure of 158,000 in December, indicating some cooling of the labor market. The overall labor cost index in the United States decreased more than predicted. In Europe, the Stoxx 600 closed neutrally, but the DAX index (-1.4%) and the FTSE 100 (-0.5%) declined despite positive inflation data. Thus, the CPI in Germany slowed to 3.1% year-on-year against an estimate of 3.2%. In France, the indicator was also lower than expected and amounted to 3.4%.
Bonds. The yield on 10-year US government bonds fell sharply below 4%. Judging by the decrease in risky assets (stocks, junk bonds), this increase in prices for treasuries was a reaction to going into protective assets after Powell's speech.
The KASE index. The KASE index showed growth for the first time after four consecutive sessions of decline. This gives a hint of the fading of the current correction wave (as we discussed earlier) due to the approach to the support levels of the 50-day moving average.
Index shares. 6 stocks in the index showed growth against 2 declining ones. The decrease by 0.4-0.5% was due to the securities of Kcell and Kazakhtelecom. Yesterday it became known that Kazakhtelecom intends to sell Mobile Telecom-Service LLP (Tele2 + Altel), and not Kcell, as the market previously believed. We cannot yet give an unambiguous answer to the question of what would be more profitable to sell – on the one hand, Tele2 + Altel are a better asset for Kazakhetelecom, which could give a higher sale price, but on the other hand, the sale of these two operators could worsen future revenues, as Kcell continues to receive negative free cash flow (-23 billion in the 3rd quarter) and increases the amount of debt. In both cases, we expect positive factors to increase dividend payments on Kazakhtelecom securities.
Currency. The dollar is testing an inclined trend line on the USDKZT chart today, which runs at about 450 tenge. The market is expecting a publication on the foreign exchange market from the National Bank.
Key market news
(=) KZTK: Kazakhtelecom will sell Tele2 by the end of the year