Our comments and expectations
External backdrop. Yesterday, the S&P 500 and the other two major U.S. indices closed largely unchanged. Investors remained in a wait-and-see mode ahead of major corporate earnings releases, as well as the Federal Reserve and ECB meetings this week. Reports emerged that Tehran proposed a temporary agreement under which it would reopen the Strait of Hormuz in exchange for Washington lifting the port blockade. Following this, Donald Trump convened a national security meeting to discuss the Iranian proposal. The Senate Banking Committee is expected to advance Kevin Warsh’s nomination for Federal Reserve Chair to a full Senate vote tomorrow. Warsh may assume the role by the end of Powell’s term on May 15 and could lead the Fed’s June meeting. Oil rose 3.3% yesterday after Iran’s foreign minister held talks in Russia with Vladimir Putin. Goldman Sachs raised its oil outlook, expecting Brent at $90 in Q4, citing disruptions in the Strait of Hormuz that may cause a supply shortfall of 9.6 million barrels per day this quarter. This morning, oil is trading around $109 per barrel, the highest since April 7. S&P 500 futures are down 0.1%, while Asian markets are moderately lower.
KASE Index. The KASE index declined 0.4% yesterday. Prices continued to correct and are beginning to return within the previous sideways range. The index closed at 7,860 points, while support levels were in the 7,890–7,900 range. Today, the index continues to decline amid profit-taking in Halyk Bank shares, which opened the session with a 6% gap down.
Index stocks. On Monday, Kazatomprom and KazTransOil led the declines. KAP shares on the LSE remain above support levels and are not yet in a local downtrend. KazTransOil, however, has been in a downtrend since March 19 and shows no signs of slowing. Kaspi ADS jumped on Nasdaq yesterday and is now recovering after three consecutive declining sessions on April 21–23. The 1.1% drop in KazMunayGas shares had limited impact on the overall picture. Today, Halyk Bank shares are declining at the open as investors lock in positions ahead of the shareholder record date. In recent years, this factor has had a less pronounced negative effect, possibly because: the bank now pays dividends twice a year; investors are less willing to exit fundamentally strong stocks.
Currency. The dollar is currently trading at 458.6 tenge, although during today’s Forex session it briefly reached our local target of 455. We believe the dollar may find support near these levels, as the relative strength index (RSI) is entering oversold territory.