Our Comments and Expectations
External Background. The S&P 500 declined for the fourth consecutive session, falling below the 50-day moving average. The trigger for the drop was once again signs of weakening consumer activity in the U.S., prompting investors to shift into defensive assets, lowering government bond yields. U.S. consumer confidence saw its sharpest decline since August 2021 due to growing concerns about economic prospects. The Conference Board index fell to 98.3 from 105.3 a month earlier. Assessments of current business and labor market conditions worsened: the current situation index dropped by 3.4 points to 136.5. Meanwhile, consumers’ short-term expectations for income, business, and employment deteriorated even further—the expectations index fell by 9.3 points to 72.9. This led traders to increase bets on the Fed easing monetary policy this year, despite persistent inflationary pressures. Among sectors, mega-cap companies suffered the biggest losses—the Bloomberg index tracking their performance fell 10% from its peak. However, consumer goods sector stocks, including Walmart, Costco, and Pepsi, posted gains. Next, investors are awaiting Nvidia’s report and data on the Fed’s preferred inflation indicator, the core PCE index, which is expected to rise by 2.6% year-over-year. In Europe, all indices closed neutral except for France’s CAC 40, which lost 0.5%. This morning, Hong Kong’s Hang Seng is up 3%, supported by tech sector stocks. S&P 500 futures are up 0.4%. Copper surged 4.5% after Trump signed an order directing the Commerce Department to explore the possibility of imposing tariffs on the metal. Oil fell to its lowest level since December 2024 and is trading at $72.6 this morning.
Bonds. The yield on 10-year U.S. Treasury bonds continues to decline. Yesterday, it dropped to 4.3%. Emerging market bonds saw strong growth.
KASE Index. The KASE index fell by 0.4% yesterday but remained within the local consolidation range. The external background for the market remains largely negative. Additional concerns arise from the formation of a bearish “head and shoulders” pattern on the index’s daily chart.
Index Stocks. The biggest decliners yesterday were Kazatomprom and Kaspi.kz, which seems somewhat illogical, as Kaspi reported strong results, and Kazatomprom did not show a significant drop on the LSE. However, it is worth noting that uranium sector stocks are currently under pressure: the URA sector ETF fell to its lowest level since September 2024, while URNM dropped to August 2023 levels. We believe that $36 is a key level for Kazatomprom GDRs. While the stock has broken below this level multiple times and then recovered, we still consider it crucial for determining the local and possibly medium-term outlook.
Currency. The dollar is trading at 500.8 tenge this morning with a slight gain. Notably, the tenge continues to resist and does not fully follow the ruble’s strengthening against the dollar, which has pushed the RUBKZT rate up to 5.83.