Our Comments and Expectations
External Background. The S&P 500 opened higher yesterday but closed down 0.2%. The focus was on soft inflation data, which supported the market only at the start of trading. Core inflation in the U.S. rose 0.2% in June compared to May, which was below expectations. The data indicated that companies have started to pass on some tariff-related costs to consumers more cautiously. This report, along with strong June employment data, led traders to reduce the probability of a rate cut in September to 50%.
A monthly BofA survey showed that fund managers are returning to risk assets at a record pace amid optimism about economic growth and strong corporate earnings. In Europe, leading index quotes declined by 0.4–0.7%. Morning futures for these indices indicate a further decrease of 0.3–0.6%. S&P 500 index futures are currently showing -0.3%. Trump stated that he is likely to impose tariffs on pharmaceutical products by the end of the month. Tariffs on semiconductors may also follow soon, along with broad “reciprocal” rates set to take effect from August 1.
In Asian markets, the mood was moderately negative this morning—quotes were rising at the beginning of the session but turned downward. Oil is trading today at $68 per barrel.
Bonds. The yield on 10-year U.S. Treasuries reached highs last seen between June 9–11. Corporate bonds are falling, and the dollar is strengthening.
KASE Index. The KASE Index rose yesterday, almost fully recovering from the previous 0.8% drop. Most likely, quotes are shedding overbought conditions by entering a local consolidation phase after the growth wave. This is a common occurrence during medium-term growth periods of the KASE Index; the last such dynamic was observed between June 19 and 30.
Index Stocks. Kazatomprom shares led the growth yesterday, not only recovering the dividend gap but also gaining in price compared to July 11, pushing quotes to a new all-time high. Given the high trading volumes, we consider this a good result as it directly indicates investor interest in the stock, with many using the price dip to buy in. Normally, with less investor interest, stocks are not bought back on the second day after a dividend gap. Today, the stock opened down 1.3%, returning to the local sideways trend formed earlier. ADS Kaspi shares on Nasdaq also showed notable growth yesterday. The stock is once again testing the downtrend, and we are watching closely for a potential breakout.
Currency. In the spring, we predicted that USDKZT could rise to 530 tenge by mid-summer — and overall, that forecast played out, as we saw a rise in the dollar after the May tax period. Given that the USDKZT quote broke upward out of a local triangle, the dollar still has a chance to reach 530 tenge by the end of the month — before the August tax period begins.