Our Comments and Expectations
External backdrop. The S&P 500 fell sharply by 2.64% on Friday. The decline was triggered by a strong U.S. labor market report, which significantly shifted market sentiment. In May, the U.S. economy added 172,000 new jobs, substantially exceeding expectations. April’s figure was also revised upward to 179,000 from the previously reported 115,000. The unemployment rate remained unchanged at 4.3%.
This led to higher U.S. Treasury yields and a reassessment of Federal Reserve rate expectations. Options traders are now pricing in one additional 25-basis-point rate hike before the end of the year. Goldman Sachs announced that it no longer expects the Federal Reserve to cut interest rates this year and has shifted its forecast for the next two rate cuts to 2027.
The situation was further complicated by comments from Donald Trump, who stated that the Fed would be making a mistake if it raised rates. Meanwhile, bond traders are betting that this week’s Consumer Price Index (CPI) data will strengthen the case for tighter monetary policy.
The deterioration in rate expectations primarily weighed on technology stocks, with the Nasdaq recording the largest decline among major U.S. indices.
European markets also moved lower, although losses were less pronounced. The eurozone economy contracted by 0.2% in the first quarter. A recent survey suggests that the European Central Bank may respond to the conflict involving Iran with two interest rate hikes this year, potentially beginning as early as this week.
Market sentiment across Asia was highly negative this morning. Hong Kong’s Hang Seng posted the smallest decline, down 1.6%, while South Korea’s Kospi suffered the steepest drop, falling 8.3%. The MSCI Emerging Markets Index lost 6.5%.
Oil prices surged 5.4% after Israel announced strikes on several military targets in Iran. At the same time, S&P 500 E-mini futures remained broadly unchanged in early trading.
KASE Index. Friday’s trading session ended on a neutral note; however, negative sentiment from global markets has already started to affect local trading from the opening bell today.
Index constituents. External pressure is being transmitted to the KASE Index through Kazakh stocks traded on international exchanges. Kazatomprom declined 3.4% on the London Stock Exchange on Friday after once again testing its 50-day moving average.
The broader picture for the stock remains largely unchanged. However, in the near term, the shares are likely to remain volatile within a relatively wide but defined trading range. The 50-day moving average is acting as resistance from above, while a medium-term upward trendline continues to provide support from below.
Notably, uranium-focused ETFs experienced even steeper losses, with URNM falling 9.4% and URA declining 9.9%.
Kaspi dropped 2.7%, marking its seventh consecutive losing session. The key technical concern is a potential breakdown below the 200-day moving average, which would represent a negative signal if the stock fails to recover in the coming sessions.
Oil and gas companies are attempting to provide support to the market today. KazMunayGas is up 1.0%, while KazTransOil is gaining 1.4%.
Currency. USD/KZT appears to be entering a period of short-term consolidation after three consecutive sessions of tenge appreciation. The consolidation is taking place around, or slightly above, the KZT 485 per U.S. dollar level.