Our Comments and Expectations
External Background. Yesterday’s global market session was relatively low in volatility. The S&P 500 was virtually unchanged on the day amid investors’ anticipation of the outcomes of negotiations between the U.S., Ukraine, and Russia, as well as Powell’s upcoming speech at the Jackson Hole Fed Symposium. On Friday, the Chair is expected to unveil a new monetary policy framework — the strategy the regulator will use to achieve its inflation and employment targets. He may also give some hints about the Fed’s plans ahead of the September meeting. Interest rate swaps show that the probability of a 25 basis point rate cut next month stands at around 80%, with two cuts already fully priced in by year-end.
Regarding the U.S.-Ukraine leaders’ meeting, reports this morning suggest that both presidents have reached a mutual understanding: Zelensky obtained Trump’s commitment to join security guarantees for any peace agreement and to postpone discussions on territorial exchanges with Russia. Zelensky called the meeting “a big step forward.” Meanwhile, Bloomberg reports that the share of companies beating earnings forecasts has reached its highest level since Q3 2021. According to Goldman Sachs, 60% of S&P 500 companies exceeded EPS forecasts by more than one standard deviation.
In Europe, indices closed flat, with the Stoxx 600 remaining near its highs. This morning, European index futures are up 0.1–0.2%, while S&P 500 futures are down 0.15%. In Asia, moderate declines indicate restrained market reactions to the interim results of the talks. Oil is trading at $66, remaining under pressure from potential increases in Russian supply.
Bonds. The yield on 10-year U.S. Treasuries continues to rise, reaching its highest level since August 1.
KASE Index. The KASE index fell for the first time after six consecutive sessions of gains. The market lost its main growth driver — BCC shares, which failed to deliver the strong performance seen earlier and slipped by 1.7%.
Index Stocks. Without BCC’s growth, the index showed its actual local dynamics. Overbought conditions have accumulated in several stocks, including Kaspi, KMG, and BCC. We do not expect a significant correction in these names, but we allow for consolidation or a minor pullback. In our view, ADS Kaspi may face the greatest correction, as they remain quite volatile on Nasdaq, while being less prone to price swings in the local market. Nonetheless, after yesterday’s sluggish KASE session, Halyk Bank may become today’s highlight — following its report and news that an EGM will take place on September 22, with dividend distribution on the agenda. From the market open, GDRs and shares are up 3–3.6%.
Currency. The U.S. dollar is trading at 538.6 tenge today — with no significant changes in the overall technical picture. We also note the ruble’s decline against the dollar for the third consecutive session.