Our Comments and Expectations
External Background. The S&P 500 index fell for the first time after five consecutive sessions of growth. Investors are preparing for today’s inflation report. The overall CPI is likely to have risen by 0.2% for the fourth consecutive month, while the annual figure is expected to accelerate for the first time since March. The core CPI is expected to remain unchanged. Neil Kashkari from the Fed stated that only “inflationary surprises to the upside” could disrupt the planned reduction in December, adding that it might take a year or two to reach the central bank's 2% target. Thomas Barkin noted that the U.S. economy is “in a good position” and that policymakers have the ability to respond regardless of how it develops. According to a BofA survey, investment activity in U.S. equities surged to its highest level since 2013, which was last seen after the presidential elections. In Europe, indices showed significant declines: the Stoxx 600 lost 2% and dropped to its lowest level since August 14, while the German DAX fell by 2.1%. This morning, Japan's Nikkei 225 is down by 1.7%, and South Korea’s Kospi has fallen for the fourth session in a row to its lowest level since November 2023. Oil is trading around $72 in the morning. Bloomberg notes that holding oil above the $70 mark will depend on next month's OPEC+ meeting: if the group does not reverse additional supply, this could easily lead to a drop in crude oil prices to $60 or below.
Bonds. The yield on the U.S. 10-year bonds has recovered to 4.43% after a slight decline. Corporate bonds are undergoing a correction.
KASE Index. KASE had another successful session, updating historical highs. The number of consecutive growth sessions now stands at 7.
Index Stocks. Yesterday, the leader in growth was BCC, which gained 2.5% after reporting. However, this did not provide any technical advantages as the stock is still in a sideways trend. The National Bank increased by 1.7%, but it is worth noting that the daily candles of growth are getting shorter, and the Relative Strength Index (RSI) is in the overbought zone at 88.9. Investors should pay attention to the potential weakening of the growth momentum in the local market, similar to what is happening with the S&P 500. AIRA stocks are also interesting: the quotes broke the downward trendline upwards but are still below an important resistance level at 845 tenge.
Currency. Last night, the National Bank conducted verbal interventions. The Central Bank reported that it is “ready for a swift response and to carry out currency interventions,” as it sees volatility in the tenge due to insufficient liquidity. The statement notes that interventions could be conducted “to return to a fair exchange rate of the tenge.” However, it is not specified how excessive the volatility must be for the National Bank to intervene in the currency market. Nonetheless, in the morning, it is noticeable that tenge sellers stepped back after such messages. The dollar has fallen to 491.9 tenge. However, it should be noted that the U.S. dollar's position in the global market continues to strengthen.