Our Comments and ExpectationsExternal Background
Friday’s session proved to be quite challenging for global markets. The major indices in the U.S., Europe, and Asia that we track fell by an average of 1.4%. The S&P 500 had its worst session since May, dropping by 1.6% and pulling away significantly from its all-time highs. The S&P 500 Volatility Index (VIX) jumped from 16.71 to 20.37 in just one session. The main trigger was a sharp and unexpected slowdown in U.S. job growth. The Non-Farm Payrolls report showed only 73,000 new jobs added in July (vs. a forecast of 100,000), with downward revisions for the previous two months totaling nearly 260,000 jobs. As a result, average job growth over the last three months amounted to just 35,000. The unemployment rate rose to 4.2%. Interestingly, Donald Trump accused the Bureau of Labor Statistics of falsifying data and dismissed its commissioner. However, the weak figures may have indirectly benefited his narrative — raising questions about whether he was right to criticize Jerome Powell for delaying rate cuts. Swap markets now reflect a 90% probability that the Fed will cut rates in September, with one more cut expected before year-end. Among corporate news, Amazon’s weak guidance on operating income weighed on other megacap stocks. In Europe, the Stoxx 600 and Germany’s DAX fell by 1.9–2.7%, while the UK’s FTSE 100 declined by a milder 0.7%. This morning, S&P 500 futures are up by almost 0.4%, while Stoxx 600 and DAX futures are gaining 0.2–0.4%. Oil dropped to its 50-day moving average after OPEC+ agreed to another significant production increase. However, Brent is rebounding today and trading around $69.8 per barrel.
Bonds
U.S. Treasury yields dropped sharply to 4.22% as investors moved into safe-haven assets.
KASE Index
The KASE index declined by 0.4% on Friday, recovering part of the intraday losses after buyers stepped in around the 6,340-point level. However, the decline is continuing today. As noted earlier, the lower boundary of the current sideways range could be closer to 6,300 points.
Index Stocks
The main underperformer in recent sessions has been Kaspi.kz, which saw heavy selling — possibly linked to profit-taking ahead of today’s earnings report and investor call scheduled for 17:00 Astana time. Kaspi’s ADSs on Nasdaq are technically in a weak position, having broken below the $78 level and set new local lows. As such, today’s earnings release will be a key driver for the stock. Also during this session, Halyk Bank shares are down 1.1%, though the decline remains moderate. Notably, KMG stock has remained relatively stable despite Friday’s drop in oil prices. Kazatomprom’s GDRs rose 2.4% following its operational report and are up another 1.8% in early trading today.
Currency
The dollar is trading at 540 KZT today. As expected, the market seems to be finding balance — volatility is easing. We believe the tenge will be supported by the ongoing tax payment period and bearish concerns about potential renewed FX interventions from the National Bank.