Our Comments and Expectations
External Background. The S&P 500 rebounded by 1.6% after a nearly full-week decline. The Federal Reserve’s preferred inflation measure, the Core Personal Consumption Expenditures (Core PCE) index, rose by 0.3% in January, as expected. At the same time, signs of weakening consumer activity emerged: inflation-adjusted consumer spending decreased by 0.5%, marking the largest monthly drop in nearly four years. However, investors responded more positively to the absence of inflation growth than to the weakening of consumer demand. On the geopolitical stage, Trump and Zelensky exchanged sharp statements, while plans for signing a deal on mineral supplies between the US and Ukraine were canceled. Treasury Secretary Scott Bessent announced that Mexico had proposed imposing similar tariffs on China as the US and called on Canada to do the same. This could lead the US to abandon the introduction of 25% tariffs on Mexican goods. In Europe, the Stoxx 600 and German DAX indices closed flat. Inflation data showed a decline in France and stability in Italy, strengthening the case for further interest rate cuts by the ECB. In Asia, the markets in Japan and China showed growth following Friday's decline. On Wednesday, the National People’s Congress of China will convene, with investors placing high hopes on a potential announcement of expanded stimulus measures for the economy.
Bonds. The yield on US 10-year Treasury bonds continues to decline, which could signal a possible softening of the Fed’s rhetoric. Meanwhile, emerging market bonds are showing strong growth. US high-yield bonds have reached their highest levels since September of last year.
KASE Index. The KASE index closed on Friday with a minimal gain of 0.1%. The technical picture remains unchanged, with stocks not forming a right shoulder in the "head and shoulders" pattern, which is a positive signal.
Index Stocks. On the local market, the growth leader was KazTransOil, which recovered February’s decline on higher volumes. The National Bank of Kazakhstan and BCC shares gained 0.8-0.9%. On the LSE and Nasdaq, the movement of stocks was mixed. Kazatomprom lost 3.7%, falling out of the local consolidation range and hitting its lowest levels since August 6, 2024. There hasn’t been any specific news that could explain this downward move. This worsens the technical picture, but there is still a last chance for the stock to rebound before losing all local support levels. Kaspi.kz rose to $104.74, supported by levels around $103. Air Astana gained 1.5% on the LSE, but is now testing its 50-day moving average again, which it has not been able to break confidently in its entire trading history.
Currency. This morning, the USDKZT pair is trading around 499 tenge. There has been no reaction to the weakening of the ruble on Thursday and Friday. The DXY dollar index is down this morning after three consecutive sessions of growth.