Our Comments and Expectations
External Background. Yesterday, the volatile S&P 500 fell by 1.8%, completely erasing the rally that began after Trump’s election victory. The VIX volatility index rose to 24.86 points, the highest level since December 18, 2023. It appears that a combination of economic data and tariff threats has worsened investor sentiment, and even some local positive news could not prevent the market correction. According to media reports, Trump signed an executive order suspending tariffs on Canadian and Mexican goods, in line with the USMCA trade agreement, until April 2. However, the restrictions may affect about 62% of Canadian imports and half of Mexican imports. Against this background, data was released showing that the U.S. trade deficit reached a record high in January.
Also, for the week ending March 1, initial jobless claims fell by 21,000 to 221,000. Now, investors' attention is focused on the Non-Farm Payrolls monthly report, which is expected to show 160,000 new jobs in February. This is slightly better than 143,000 in January, but weaker than the figures seen at the end of 2024.
Federal Reserve member Patrick Harker expressed concern that disinflation may be "at risk" amid growing price pressures. In Europe, the Stoxx 600 index closed flat, while DAX added 1.5%, again updating its historical highs. In the morning, trading in China is neutral, while Hong Kong’s Hang Seng index reached its highest level since February 2022. Citi stated that the U.S. and China might reach a new trade agreement in the second half of the year.
In the commodity markets, there are virtually no changes. According to Bloomberg, oil futures for 2025 delivery are approaching $60 per barrel, which could threaten production growth.
Bonds. The U.S. 10-year Treasury yield remained unchanged yesterday, while corporate bonds slightly declined.
KASE Index. The KASE index fell by 0.2% yesterday, pausing the slow upward trend that had been observed for five consecutive sessions.
Index Stocks. The leader in decline was BCC, which gave a signal for a first correction after a rally seen in March. The leader in growth was KMG, which continues to rise despite falling oil prices. Since February 20, its quotes have added 7.7%, reaching the highest level since January 28. Interestingly, Kazakhtelecom is showing a similar dynamic: both stocks started to decline in January, reached a local bottom in early February, and have been recovering since then. On the London Stock Exchange (LSE), Halyk Bank and Kazatomprom also showed growth. While HSBK GDRs remained in a sideways trend after a 1.5% increase, KAP GDRs fully recovered the decline seen between February 28 and March 4. Kaspi ADS continues a slow decline, now testing support at the 50-day moving average.
Currency. Yesterday, the dollar showed a false breakout above 496.5 KZT and reversed during the session. Currently, USDKZT is trading around 497.5, staying above support levels.