Our Comments and Expectations
External backdrop. Yesterday the U.S. market demonstrated a rather dramatic picture. In the morning, S&P 500 futures were up 1.3% thanks to Nvidia’s strong earnings report. However, once trading opened, investor optimism quickly faded — the index reversed and closed with a -1.6% decline. There was no clear single news trigger that could fully explain the drop, but analysts linked the market reversal to the fall of bitcoin, which lost 5.4% yesterday and 18.4% since November 10. Additionally, delayed labor market data for September were released: despite an unexpected increase of 119,000 new jobs (versus 115,000 in August), the unemployment rate rose to 4.4%. Continuing jobless claims increased to 1.9 million, signaling difficulties with re-employment.
Despite the weak labor data, Fed officials did not soften their tone — Michael Barr and Anna Paulson noted that the Fed must act cautiously as inflation remains above target, while Austan Goolsbee reiterated concerns about cutting rates at the next meeting. On the geopolitical front, a small positive came from Zelensky, who said he agreed to work on a peace plan proposed by the U.S. and Russia and expects to speak with Trump soon.
European indices closed slightly in the green, as they finished trading before the U.S. selloff began. However, DAX and Stoxx 600 futures are currently down 1.2–1.5%. S&P 500 futures are trading slightly higher, up 0.24%. Asian markets today are showing even deeper declines, led by South Korea’s Kospi at -3.8%. Oil trades at $62.7. Sanctions against Lukoil come into force today, which may remove up to 48 million barrels of oil in transit from the market.
Bonds. The yield on 10-year Treasuries fell to 4.08% as investors moved away from risk.
KASE Index. The KASE index rose 0.6% yesterday after six consecutive declining sessions. This could have been a solid setup for a corrective rebound, but external negative sentiment may once again complicate the outlook for local investors.
Index stocks. Most index components showed moderate positive momentum yesterday. Notable was the growth of Kazakhtelecom and Kcell — potentially linked to Minister Zhumagarin mentioning plans to bring Kazakhtelecom to an SPO. The topic is not new and has surfaced at the government level before, although quite some time ago. Shares of Kazatomprom also rose 1.5%, following positive sentiment on the LSE from the previous session. The stock closed neutral yesterday, which is good considering uranium ETFs fell sharply by 6.5–6.7%. This decline may weigh on Kazatomprom GDRs today. HSBK GDRs fell 2.1% to $23.8. According to Halyk Finance, the placement price is expected at $23 per GDR (each representing 40 common shares).
Currency. For the first time in six sessions, the dollar did not decline yesterday and closed slightly above 518 tenge.