Our comments and expectations
External backdrop
The S&P 500 closed with a gain of 0.25%, although at the start of the session quotations showed a rise of about 0.8%. Trump abandoned attempts to involve partners in military action and criticized allies who openly rejected his calls, while continuing to claim that the conflict would end soon. He also stated that once the war ends, oil prices will decline and that the United States no longer needs or wants assistance from NATO countries. Israel announced the killing of Ali Larijani, head of Iran’s security service, and the commander of the paramilitary Basij unit. Iran has intensified attacks on energy facilities around the Persian Gulf, including setting fire to a major gas field in the UAE. According to Kevin Hassett, the war in Iran is expected to last four to six weeks and will begin to negatively affect consumers if it continues longer. Meanwhile, Alex Altman of Barclays believes that U.S. equities are showing the strongest buy signal in nearly a year. In Europe, indices rose by 0.7–0.8%. It was reported that German investor optimism deteriorated much more sharply than expected as the war in Iran weakens earlier hopes for recovery. The ZEW expectations index dropped sharply to −0.5 in March from 58.3 in February. Asian markets are showing positive sentiment this morning: Nikkei 225 and Kospi are up 2.9% and 5%, respectively. S&P 500 futures are currently rising by around 0.5%. Oil is declining after yesterday’s rally and is trading below the $101 per barrel mark.
KASE Index
For KASE, both the market environment and the external backdrop were positive yesterday, allowing the market to post a gain of about 1%. However, the daily candlestick reflected some fluctuations in investor sentiment related to oil companies. Previously, the main support came from the shares of KazMunayGas and KazTransOil, but today Kazatomprom and Kaspi shares may take the lead as the main drivers of growth.
Index constituents
The shadow on the daily candlestick of the index resulted from intraday fluctuations in the shares of KazMunayGas and KazTransOil. Both stocks are showing signs of a weakening rally, and we also believe that the rise in share prices may have outpaced the fundamental impact of higher oil prices on the companies’ financial results. Given that oil has now stabilized around $100 per barrel, this may create risks of a local pullback, primarily for KMGZ shares. In the longer term, the potential for growth or decline will increasingly depend on geopolitical developments. Yesterday’s session was positive for Kazatomprom and Kaspi shares on foreign exchanges. In the case of KAP GDRs, the picture remains largely unchanged, while the rise in KSPI ADS looks encouraging and again hints at the possibility of forming a new wave of growth. Air Astana shares were the underperformers yesterday, although a slowdown in the decline is being observed on KASE. In addition, airline stocks in the U.S. rose yesterday amid strong demand for tickets ahead of price increases.
Currency
Yesterday the dollar fell to 476.5 tenge, but was later bought back and is showing growth today, which may be an early signal of a slowdown in its decline.