Our Comments and Expectations
External Background. Yesterday, the S&P 500 closed with a notable decline for the first time in the last four trading sessions. The first negative catalyst for the markets was Nvidia’s warning about export restrictions on its chips to China, which could lead to a $5.5 billion revenue loss. However, a few hours later, China indicated its willingness to discuss a trade agreement with the U.S., provided it is treated with respect. Another factor that accelerated the market’s decline was a speech by Fed Chair Jerome Powell. He stated that U.S. economic growth may be slowing and that tariffs turned out to be higher than expected, potentially leading to higher inflation. Powell also emphasized that the Fed would wait for more economic data before making any rate changes. In Europe, the major indexes ended flat despite a weak earnings report from chip equipment maker ASML. In Asia, the morning session opened in positive territory: Hang Seng is up 1.3% and Nikkei 225 is up 1.1%, supported by trade talks between the U.S. and Japan. Oil prices rose by 0.8% in the morning and are trading at $66.5 per barrel, following new U.S. sanctions on Iranian oil exports.
Bonds. The 10-year U.S. Treasury yield fell to 4.28% yesterday, dipping below its 50-day moving average. Meanwhile, corporate bonds showed neutral performance.
KASE Index. The KASE index had a neutral session yesterday with a modest gain of 0.14%. However, the day before, it broke out of a local consolidation range and is now attempting to establish itself at higher levels. Local resistance levels are currently around 5,700 points, with interim resistance at 5,655. Given the morning rebound in futures, the external backdrop for the index is expected to be neutral.
Index Stocks. Bank CenterCredit rose by 2.1% yesterday, becoming the top performer of the day. The stock remains within a sideways trend and needs to break the resistance level at 2,880 KZT for a clearer direction. On the LSE, Halyk Bank's GDRs fell by 3%, while on KASE they gained 0.3%. This discrepancy is due to half of the decline in London occurring after KASE had closed. Considering the positive market sentiment in the morning, a slight rebound on the LSE is likely in early trading hours. However, the overall pressure from the external background remains strong, affecting all securities with overseas listings. Kaspi.kz GDRs also saw a sharp 4.2% drop during yesterday’s session. The stock is once again approaching recent lows and remains in a downtrend.
Currency. The USDKZT rate rose sharply by 1.2% yesterday and broke out of a "flag" pattern, which is a bearish signal for the tenge. The probability of the tenge weakening to 530 per U.S. dollar has significantly increased. The decoupling from the DXY dollar index and the USDRUB rate continues. Against the euro, the tenge hit new all-time lows again, while the ruble strengthened to 6.35 KZT.