Our comments and expectations
External backdrop. The S&P 500 fell 0.2% on Friday in a volatile session. The spotlight was on Warsh’s speech in Jackson Hole, which struck investors as hawkish. He pledged to bring inflation back to target, which boosted expectations of a rate hike and stabilized the long-term bond market. Warsh sought to reassure investors by demonstrating firm resolve to tackle price pressures after the recent volatility in the Treasury market. Nevertheless, after his remarks, money markets began to price in the probability of a hike at the September 16 meeting at above 50%, while at least one increase by year-end is viewed as virtually guaranteed. The 10-year government bond yield rose to 4.72%. In Europe, the Stoxx 600 and DAX advanced, with the German benchmark reaching all-time highs. This morning, oil is rising to $89.6 per barrel following reports that U.S. forces struck Iranian missile launchers that were preparing to lay mines in the Strait of Hormuz, to which Iran promised retaliatory measures. In addition, the U.S. is set to receive a controlling stake over more than 65 bn barrels of Venezuela’s proven oil reserves, which, according to Trump, will be used to replenish depleted U.S. strategic reserves. In Asia, relatively calm trading is again being observed. China’s official manufacturing PMI rose to 49.8 in August from 49.2 in July versus a median forecast of 49.5. S&P 500 index futures are down 0.15% this morning.
KASE Index. KASE renewed its all-time high on Friday, closing at 8,131.71 points. At the same time, it is worth noting that commodities such as gold and uranium declined, which may pressure the respective stocks today.
Index stocks. Kazatomprom was the top gainer on KASE on Friday and an underperformer on the LSE, which is why its quotes are declining on the local market today. Uranium on Thursday posted its first decline since August 4, and on Friday it lost as much as 1%. The likely reason was the strengthening of the dollar on the global market after Warsh’s hawkish statements. As a result, Kazatomprom GDRs fell 2.6% on Friday. The dollar also had a negative impact on gold prices, which fell 3.6% over two sessions. In this regard, for now we are downgrading the local ratings on KZAP and CORE shares from “buy” to “hold”. As for Kaspi, the stock showed a slight rise on Nasdaq, which is a positive signal since the quotes did not continue to correct actively. On the local market, shares of KazTransOil continued to rise.
Currency. On the USDKZT chart today, the dollar is not responding with gains to the strengthening of the DXY index. Most likely, this is because the U.S. currency had already strengthened noticeably against the tenge earlier, testing the resistance level of 466 tenge. After the unsuccessful test, the tenge is strengthening again today, and USDKZT quotes are falling to 462 tenge.
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