Our Comments and Expectations
External backdrop. U.S. equities paused their advance after three strong sessions. The S&P 500 declined by 0.6%, while the Nasdaq lost 1.15%. The pullback came ahead of the first Federal Reserve meeting under Chairman Kevin Warsh and reflected cautious investor sentiment, despite the continued decline in oil prices. Brent crude fell 5.2% yesterday to $79.8 per barrel, its lowest level since March 3. This effectively erased the gains recorded during the two-session rally that followed the onset of the conflict between Iran and the United States. Both countries are preparing to officially sign a temporary peace agreement in Switzerland on Friday, although the text of the memorandum of understanding has not yet been published. Donald Trump stated that the agreement could remain in force even if Israel launches an attack on Lebanon. Iran, meanwhile, reported that the United States has begun lifting its maritime blockade. Qatar announced plans to restore most of its LNG export capacity within two months following the reopening of the Strait of Hormuz. At the same time, Kevin Warsh has indicated that he intends to speak less about monetary policy than his predecessors. SpaceX officially agreed to acquire Cursor, sending the company’s shares up 4.8%. Since its IPO, the stock has now gained nearly 50%. European indices posted only modest gains. In Asia, sentiment is mostly positive this morning, with the CSI 300, Nikkei 225, and Kospi all moving higher. Hong Kong’s Hang Seng is the only major index in negative territory. Consumer spending and investment activity in China have fallen to levels typically associated with the pandemic period. Retail sales declined by 0.6% in May. Brent crude is currently trading around $78.5 per barrel, while S&P 500 futures are up 0.2%.
KASE Index. The KASE Index closed flat yesterday. The market therefore continues its sideways consolidation following the rally on June 12 and the attempt to break through key local resistance levels on June 15. Trading remains subdued at today’s market open, with no significant directional movement observed.
Index constituents. Kazatomprom shares posted the strongest gain. However, the company’s GDRs failed to follow suit and instead declined by 1.9%. The local technical picture does not appear critical, although the decline is limiting the upward momentum that emerged after the recent rebound from the 200-day moving average. It is worth noting that the prices of local shares and GDRs have now converged. Kaspi gained a modest 0.9% and has begun testing the important 50-day moving average near $84. A breakout above this level would support a short-term Buy recommendation. Meanwhile, Halyk Bank failed to overcome a similar resistance level and declined by 1.1%. Air Astana shares have delivered solid gains in recent sessions and are now breaking above their 200-day moving average. Our recent tactical idea on Solidcore has also begun to play out. Gold prices have paused after their recent advance, but the metal continues to maintain upside potential.
Currency. The sideways trend in the USD/KZT exchange rate remains intact. Today, the pair is fluctuating around KZT 489 per U.S. dollar. Meanwhile, the Russian ruble has weakened against the dollar to 72.99.