Our Comments and Expectations
External Background. The S&P 500 rose by 0.6% on Friday, reaching historical highs above 5,000 points and continuing the rally that began on October 30, 2023. Since then, the index has increased by 22%. The NASDAQ jumped 1.25%, showing that the technology sector dominated the market. The revision of inflation data showed no surprises to the upside, highlighting progress in controlling CPI at the end of 2023. Consumer prices, excluding food and energy, rose by 3.3% year-over-year in the last three months of 2023. Despite the ongoing rally and growing belief in the dovish decisions of the Fed, there are increasing opinions about a potential market correction. According to Michael Hartnett from Bank of America, the rapid rally that led to record gains in U.S. stocks is now close to triggering several sell signals. Meanwhile, on the political front, Americans trust Trump more than Joe Biden to manage the U.S. economy, as shown by a Financial Times poll. Trump leads Biden by 11 points on this issue, with 21% of respondents stating that they do not trust either of them. In January, Canada created 37,300 jobs, more than double the forecasts and the largest increase in four months. In Europe, major indices showed a moderate decline of up to 0.3%. Traders lowered expectations for the Bank of England’s easing to 75 basis points this year. In Asia, markets in China (Lunar New Year), Korea (Korean New Year), and Japan (National Foundation Day) are closed today. According to January data, credit growth in China has fallen to a record low. Oil prices slowed after rising above $81 per barrel. Copper has shown declines in 8 of the last 9 sessions.
Bonds. The yield on 10-year U.S. Treasuries rose on Friday but remained below local resistance levels. The 2-year yields showed a more confident increase. Corporate bonds saw growth in the non-investment-grade segment.
KASE Index. The trading session on Friday was quite positive, with the historical maximum being updated again, and the index surpassing the 4,400-point mark.
Index Stocks. The National Bank looks good after breaking the 167 level, with prices rising by 3.1% to 173 tenge. However, no accompanying news was noted to explain the increase. It’s worth mentioning that GDRs also broke significant resistance levels on the LSE and showed growth to $15.68, but retreated to starting positions by the end of the session. This indicates that the technical picture on the two exchanges currently shows different results—either the GDRs will need to catch up with the stocks, or the stocks will correct. Notable growth was also observed in the shares of BCK, Kcell, and KEGOC. Kazatomprom fell by 1.3% following a previous drop of 3.4% in its GDRs. Uranium prices rose again, standing above $100 per pound.
Currency. The dollar had a weak week, which we believe was related to the tax period. However, we expect the U.S. currency to recover this week.
Key Market News
(=) AIRA: Air Astana announces the establishment of the offering price and completion of the book-building process regarding its IPO.