External Background:
The S&P 500 fell by 0.7% on Friday. Again, stocks of mega-cap companies, most of which are tech giants, were in the red. However, some semiconductor, software, finance, and healthcare manufacturers posted gains. Nike noticeably dropped nearly 20% following a disappointing report. The central macroeconomic report was the PCE, where the Fed's preferred measure of core inflation in the U.S. showed a slowdown. Consumer sentiment in the U.S. declined less than initially expected, amid expectations of easing inflationary pressure. Essentially, the PCE indicated that inflation is approaching the Fed's target rate while the economy remains resilient. However, this did not significantly inspire the markets, as attention shifted to the election debates between Trump and Biden, where Biden performed rather poorly. Investors believe that Trump’s return promises a consistently high budget deficit, increased tariffs, and pressure on long-term bonds. Goldman Sachs believes that the U.S. presidential elections and their aftermath are set to bring significant market volatility to investors in the second half of the year. In Europe, the Stoxx 600 rose by 1%, while the French CAC 40 increased by 2.7% after the first round of parliamentary voting, where Marine Le Pen’s far-right National Rally outpaced President Emmanuel Macron's centrist alliance, which is perceived by investors as a path without a sharp change in the country's policy. The second round of voting in France will take place on July 7. In Asia, prices are showing neutral movement this morning. Oil is trading around $85.6, while uranium has risen for the second consecutive session to the same $85.6.
Bonds:
The yield on 10-year U.S. Treasuries rose on Friday following the results of the Trump-Biden debates. Corporate bonds fell in price, especially those from emerging markets.
KASE Index:
The KASE closed neutrally on Friday and opened today with a slight gain of 0.2%. After hitting new highs and breaking out of the sideways trend, it would be logical to continue the upward movement; however, the results so far are modest.
Index Stocks:
Kazakhtelecom continued to rise in the market, and today Kazatomprom is up 1.5%, reflecting the influence of rising uranium prices. Overall, with support from commodities, Kazatomprom is becoming more attractive than simply testing support levels without significant results, as it did previously. Kaspi dropped by 2.5%, confirming concerns regarding the test of significant resistance levels at ADS.
Currency:
The National Bank announced today that it will sell $450-550 million from the National Fund in July and purchase $250-350 million for the ENPF, resulting in net sales of $200 million, or double the amount from the previous month. In our view, the tenge would be much more comfortable with $300-400 million in net sales, and the current volumes are likely to support the national currency rather than cause a reversal. On the other hand, there are questions regarding the continued purchases for the ENPF, even though the share of foreign currency assets there has already reached 30%. This morning, USD/KZT quotes are reaching 476 tenge (the resistance levels from October 2023).