Our comments and expectations
External Background. Last week was the worst for the U.S. market since March 2023, following a series of disappointing macroeconomic reports. The Friday report did not serve as a lifeline for investors and triggered sell-offs across all sectors of the S&P 500. Nonfarm payrolls grew by 142,000 last month (23,000 below forecasts), leaving the three-month average at its lowest level since mid-2020. The unemployment rate dropped to 4.2%, marking the first decline in five months. The S&P 500 fell early in the session and remained at daily lows until the close. This resulted in a breakdown below the 50-day moving average, and the volatility index (VIX) returned to 22.4 points after just one session. Tech stocks, especially semiconductor producers, megacap stocks, and the banking sector, were the hardest hit again. The tech ETF fell by 2.6%, and the financial ETF by 1.5%. Now, markets will be waiting for the Federal Reserve meeting on September 17-18 to gain clues about the rate cut trajectory. It should be noted that the majority of the market is confident that the regulator will ease by 0.25%, with slightly less than a third expecting a bolder 0.5% cut. In Europe, the Stoxx 600 fell for the fourth consecutive session, with a total decline of 3.6% over the period. A similar result was seen in Germany's DAX. The UK's FTSE 100 posted smaller losses. Oil, after breaking through key local support levels, is approaching its lowest since March 20, 2023.
Bonds. Despite the significant drop in the stock market, the yield on U.S. 10-year government bonds showed a more modest decline. However, the daily candlestick chart reflects a highly tense and volatile session in the bond market on Friday. Corporate bonds also experienced slight declines in price.
KASE Index. The KASE index reached the levels of the sideways trend from the second half of July, which helped it hold back the correction. Quotes posted their first growth after seven consecutive declining sessions. However, a new wave of negative sentiment from Western exchanges could again pressure the index today.
Index Stocks. There were no significant changes among local market stocks. Even the 1.5% rise in Bank CenterCredit shares only returned them to the range of the sideways trend, which the stock could have exited if the decline had continued for a fourth consecutive session. Among foreign stocks, ADS Kaspi saw the largest drop, affected by the weakening U.S. market. At the same time, Kazatomprom, which often correlates with U.S. indices due to its inclusion in uranium ETFs, showed growth, while the Global X Uranium (URA) and Sprott Uranium Miners ETF (URNM) fell by 3.7% and 3.4%, respectively.
Currency. A surge of tenge buyers on Friday led to the dollar dropping below the 480 mark on Forex (480.4 on KASE). On the other hand, the USDKZT chart has formed an upward trend line with support from the 50-day moving average for the U.S. dollar, so the drop of the dollar below 480 tenge does not yet indicate a significant change in the trend.