Our Comments and Expectations
External Background: Yesterday, there was a wave of correction on foreign stock markets, the opposite of what caused exchanges to rise the day before. The S&P 500 lost 1.4%. The markets exhibited a classic "risk-off" state, characterized by the sell-off of risky assets and the buying of safe-haven assets—such as Treasury bonds, utility companies, and defensive consumer sector stocks. Technology companies, particularly semiconductor and software manufacturers, as well as a significant portion of investment banks, saw declines. The volatility index VIX rose by 13.5% to 18.58 points. One potential trigger for the correction could have been the report on initial jobless claims, which reached a nearly year-high. According to the Labor Department, initial claims increased by 14,000 to 249,000 for the week ending July 27. Bloomberg's average forecast among economists anticipated 236,000 claims. Among specific corporate news, Amazon's disappointing earnings report after the market close caused its shares to drop by 6.9% in after-hours trading. In contrast, META's shares rose by 4.8% following its report. Today, markets will monitor the monthly labor market report in the U.S. In Europe, indices also fell into negative territory, with the German DAX suffering the most, dropping by 2.3%. This morning, the Asian markets are showing a bleak picture—Japan's Nikkei 225 fell by 5%, marking the largest single-day decline since Covid-19. Concerns are growing that the Bank of Japan might raise rates again in October. South Korea's Kospi is down by 3.6%, and Hong Kong's Hang Seng is down by 2.2%. Oil is trading at $80, and copper remains stable after a 2.3% decline yesterday.
Bonds: The yield on 10-year U.S. Treasury bonds fell below 4%, a level not seen since February. The decline in yields reflects the rise in government bond prices, a result of investors fleeing to safer securities.
KASE Index: KASE, meanwhile, was far from the global volatility, closing up by 0.1%. However, the negative impact from external markets may "seep" through to shares listed on the LSE and NASDAQ.
Index Stocks: The largest price deviation yesterday was noted for Kazatomprom, which became the leader in growth with a result of +0.8%. On the LSE, shares rose to $39.9, an increase of 5%, but the end of the session was neutral. It’s worth mentioning that uranium ETFs URNM and URA fell sharply yesterday by 7-8%, which may affect Kazatomprom today. ADS Kaspi dropped by 4.5%, breaking below its 50-day moving average. Yesterday, we published an assessment of Kaspi with a new recommendation of Hold for ADS, citing increased interest expenses and a decrease in the dollar value of the company. Due to these two factors, the attractiveness of Kaspi shares has diminished. The GDRs of Air Astana also declined, falling below $7.
Currency: The dollar is trading at 474 tenge in the forex market today and is not showing significant changes following yesterday's announcement of increased foreign currency sales from the National Fund.