Our Comments and Expectations
External backdrop. The S&P 500 continued its advance after rebounding from its 50-day moving average. Oil prices continued to decline, falling below $90 per barrel, while optimism grew regarding a diplomatic resolution in the Persian Gulf and the reopening of the Strait of Hormuz.
A senior U.S. administration official estimated the probability of a near-term agreement at 80–85%. Donald Trump stated that, in his view, an agreement could be signed over the weekend or on Monday.
Iranian Foreign Minister Abbas Araghchi noted that the Islamabad Memorandum of Understanding “has never been closer to completion.”
This morning, reports emerged that the United States and Iran had reached an agreement to resume operations through the Strait of Hormuz.
Against this backdrop, traders shifted their expectations for the next Federal Reserve rate hike into next year.
Data released on Friday showed that U.S. consumer sentiment improved in early June for the first time in four months, as lower gasoline prices provided some relief to consumers. Americans now expect prices to rise by 4.6% year-over-year over the next 12 months.
As a reminder, the next Federal Reserve meeting under Chairman Kevin Warsh will take place this Wednesday.
European markets posted solid gains of 1.6–1.9% on Friday, while futures on the Stoxx 600 and DAX indices are up another 1.3–1.9% this morning.
Asian markets are also trading higher. Japan’s Nikkei 225 has surged 5%, while South Korea’s Kospi has gained 5.2%.
S&P 500 futures are rising by 2.1%.
Brent crude has fallen below its 200-day moving average and is currently trading at $83.3 per barrel.
Goldman Sachs lowered its forecast for the average Brent oil price next year to $80 per barrel and for WTI to $75 per barrel.
KASE Index. The KASE Index gained 1.2% on Friday, supported by positive sentiment from Western markets. Optimism remains intact today; however, because GDRs and ADSs did not post significant gains, trading on KASE is opening with a more modest increase of 0.3%.
Index constituents. Kaspi shares rose 3.5% on Friday, while the company’s ADSs on Nasdaq declined by 2.1%. This divergence may create some tension in the local market and could make Kaspi a drag on the index today despite the positive external backdrop.
During the previous session, Kaspi’s ADSs simultaneously tested both their 100-day and 200-day moving averages. This may have contributed to the decline and to the stock’s failure to participate in the broader U.S. market rally.
Kazatomprom closed the session unchanged, as did most uranium-related companies, largely ignoring the strength of global equity markets.
Today, Kazatomprom’s GDRs on the London Stock Exchange are up 1.5%.
Following the company’s neutral first-quarter results, we lowered our target price for the shares from KZT 35,500 to KZT 33,500 while maintaining our Hold recommendation.
Net loss attributable to shareholders amounted to KZT 30 per share, driven almost entirely by foreign-exchange effects and negative contributions from associated companies.
Halyk Bank’s GDRs are up 0.8% today, although no major breakout is visible at this stage.
Gold prices have been rising strongly for a second consecutive session, making Solidcore shares potentially attractive again in the near term.
Currency. The U.S. dollar is attempting to move above its previous high of KZT 491.6 per dollar, established on June 1.