Our comments and expectations
External Background: The S&P 500 is recovering. The quotes experienced significant intraday price fluctuations, dropping 1.6% at the open but gaining 1.1% by the end of the session. The initial drop was driven by inflation data: the core Consumer Price Index unexpectedly accelerated to 0.3% month-on-month in August, while the headline figure came in at 0.2%, as expected. The rise in core inflation significantly lowers the chances of a rate cut exceeding 25 basis points at the upcoming Fed meeting. However, despite the negative news, after 11 a.m. Eastern Time, the S&P 500 began to rise at a steady pace until the trading hours concluded. As usual, the technology/semiconductor sector and large-cap companies were the leaders in growth. Trump and Harris held their first debate, where the pressure from the Democratic candidate was palpable. In Europe, leading indices also experienced high volatility during the trading day and closed neutrally. Oil prices returned to levels above $70 per barrel for Brent. U.S. crude oil inventories increased by 833,000 barrels last week, failing to meet analysts' estimates, according to EIA data. Citi stated that OPEC+ may need to cut production by 1 million barrels per day next year if it wants to balance the market amid a sharp increase in supplies from outside the group. In the Gulf of Mexico, 130 oil rigs were shut down due to Hurricane Francine. In Asia, a strong increase was observed in the morning (except for mainland China), with Japan's Nikkei 225 leading at +3.4%.
Bonds: The yield on 10-year U.S. Treasuries rose slightly, while non-investment grade corporate bonds and emerging market bonds also gained ground.
KASE Index: The KASE index declined by another 0.4% yesterday. From the highs of August 26, quotes have lost 3.2%, which, given the volatility of global indices, cannot yet be considered a deep decline. However, during this entire period, KASE has shown only one session of modest growth. Today, we will observe how strong the correlation of the local market is with external markets amid their rise yesterday.
Index Stocks: The National Bank once again led the declines. There were no notable background news triggering this weakening. Meanwhile, the quotes continue to approach May's lows at 194 tenge. The GDRs of Kazatomprom surged on the LSE, storming recent local highs, while uranium rose above $80 per pound. Other GDRs and ADS showed moderate price declines.
Currency: The tenge is today breaking below the 50-day moving average on the USDKZT chart. This can be considered a positive technical sign for the national currency. One of the triggers for growth could have been yesterday's news that Kazakhstan plans to use additional withdrawals from the Oil Fund by the end of the year to finance regions and investment projects. If the dollar falls below 476 tenge, the next local target will be at 473 tenge.