Our Comments and Expectations
External backdrop. The recovery in the technology sector continued for a second consecutive day on Tuesday, lifting U.S. equity markets higher on the final trading day of the quarter. The S&P 500 gained approximately 0.8%, the Nasdaq rose about 1.5%, and the Dow Jones Industrial Average reached a new record for the second consecutive session, climbing to around 52,300 points.
Semiconductor manufacturers once again led the gains, while the small-cap Russell 2000 index also reached a new high.
Despite a weak June performance for mega-cap technology companies, the quarter as a whole became the strongest in six years for both the S&P 500 and the Nasdaq, while the Dow posted its best quarterly performance since 2022.
At the same time, optimism was not unconditional. The yield on the 10-year U.S. Treasury rose to 4.46% amid inflation concerns related to the conflict with Iran and the record weakness of the Japanese yen, which fell to its lowest level against the U.S. dollar since the 1980s.
Regarding Iran, U.S. special envoys Witkoff and Kushner arrived in Qatar for indirect negotiations without direct contact with Iranian representatives.
European indices closed at record highs, supported by preliminary inflation data from Germany, France, and Italy that came in below expectations. Markets interpreted this as evidence that the inflation spike may have peaked and began pricing out further European Central Bank rate hikes, resulting in lower bond yields.
Brent crude remains around $73 per barrel.
This morning, U.S. equity futures are slightly lower, while Asian markets are showing mixed performance. South Korea's Kospi is down 2%, while Japan's Nikkei 225 has gained 0.6%.
KASE Index. The KASE Index declined slightly by 0.1% yesterday, largely due to weakness in Kaspi and Air Astana shares, and continues to trade within a sideways range for yet another session.
Index constituents. On Tuesday, Kaspi shares became the primary driver of the index decline, following the 1.7% drop in its ADSs on Nasdaq on Monday.
Yesterday, Kaspi continued to decline on Nasdaq, falling by another 0.7%.
Air Astana shares also posted a notable decline, losing 0.9%. Overall, the airline's shares continue to trade within a narrow range of KZT 645–660, and a breakout in either direction would likely signal the beginning of a new trend.
On the other hand, several index constituents recorded solid gains.
Kcell led the gainers, rising by 0.7%, although the stock itself continues to trade within a narrow range of KZT 3,200–3,260.
Halyk Bank also recovered modestly, gaining 0.5% while remaining directly above a major horizontal support level.
On the London Stock Exchange, the bank's GDRs rebounded slightly from their 200-day moving average, rising by 0.8%.
Shares of KazMunayGas, KazTransOil, and Kazatomprom also advanced yesterday.
Inflation data for June are scheduled to be released today. We expect annual inflation to slow from 10.4% to 10.2%, primarily due to the high base effect in non-food goods from the previous year.
Currency. The USD/KZT exchange rate declined significantly, falling by more than KZT 5 this time. The nearest support level is the 200-day moving average at KZT 477.
Meanwhile, after a one-day pause, the Russian ruble resumed its decline. The RUB/KZT exchange rate has approached the KZT 6 level for the first time in three months.