Our Comments and Expectations
External backdrop. U.S. indices started the third quarter on a weaker note. Following a record close the previous day, the Dow Jones ended slightly below the flat line, the S&P 500 declined by approximately 0.2%, and the technology-heavy Nasdaq lost around 0.6% amid a pullback in semiconductor stocks.
The labor market remained the main focus. The ADP report showed that private-sector employment increased by only 98,000 in June, below both expectations and May's reading, pointing to a slowdown in hiring activity.
Nevertheless, the yield on the 10-year U.S. Treasury rose to around 4.48%, while the Japanese yen weakened to its lowest level against the U.S. dollar in four decades despite growing concerns about potential currency intervention by Japanese authorities.
In his first public appearance since taking office, Fed Chair Kevin Warsh provided no guidance on the future path of interest rates during the ECB Forum in Sintra. However, he emphasized the Federal Reserve's commitment to price stability, stating that prices remain too high. Following these comments, markets recovered from their intraday lows.
Oil prices continued to decline, with Brent crude falling toward $71 per barrel following the conclusion of indirect U.S.-Iran negotiations in Doha and growing expectations that nuclear talks may extend beyond the August 18 deadline.
European indices mostly closed in negative territory, giving back part of Tuesday's gains amid the global technology selloff and investor caution ahead of U.S. labor market data.
This morning, U.S. index futures are generally moving lower as investors await key employment data, while Asian markets have experienced significant declines: South Korea's Kospi has fallen by 7.9%, and Japan's Nikkei 225 is down 2.5%.
KASE Index. The KASE Index gained 0.4% yesterday, supported by Air Astana and KazTransOil shares, and has a good chance of extending its gains today following the strong performance of Kazakh securities on international markets.
Index constituents. On Wednesday, Air Astana and KazTransOil posted the strongest gains among index constituents, rising by 1.4%.
At one point, Air Astana shares surged by as much as 3.5%, appearing to break above the upper boundary of their narrow trading range.
However, if the stock manages to establish itself above KZT 670, a move toward KZT 690 becomes increasingly likely.
On the London Stock Exchange, Air Astana's GDRs gained 3.4%, narrowing the price discrepancy between the two markets.
KazTransOil shares rose for a fourth consecutive session and may attempt to revisit their local highs reached in mid-June.
Yesterday, Kazatomprom's GDRs and Kaspi's ADSs also posted strong gains on the LSE and Nasdaq, respectively.
However, we believe significant upside in Kazatomprom shares is unlikely in the near term due to the premium currently embedded in the local share price.
Kaspi shares, on the other hand, are likely to post a noticeable gain by the close of today's trading session.
Halyk Bank shares also gained 0.8%, rebounding from a strong horizontal support level.
Although the bank's GDRs on the LSE did not confirm the move seen on KASE, they continue to trade above their 200-day moving average.
Currency. The USD/KZT exchange rate increased slightly following Tuesday's significant decline.
The National Bank announced lower foreign currency sales plans for July, amounting to $200–300 million.
Meanwhile, the Russian ruble strengthened yesterday and continues to exhibit elevated volatility. The RUB/KZT exchange rate increased from 6.08 to 6.18.