Global financial markets may see increased risk aversion today following reports of potential criminal proceedings against US Federal Reserve Chair Jerome Powell. Powell himself linked these actions to political pressure from the current administration aimed at forcing interest rate cuts, DKNews.kz reports.
According to the Kazakhstan Association of Financiers (KAF), the situation has added a new layer of uncertainty for investors, strengthening demand for safe-haven assets and increasing market volatility.
Currency market: the dollar strengthens against the tenge
At Friday’s trading session on KASE, the USD/KZT exchange rate rose by 1.12 tenge to 510.08 tenge per dollar, partially offsetting the previous day’s decline. Trading activity remained elevated, with total turnover reaching $247.7 million, up $42.1 million.
KAF analysts note that demand for foreign currency, despite a relatively stable external environment, was likely driven by Kazakh companies with foreign-currency liabilities as well as households taking advantage of attractive exchange-rate levels.
Meanwhile, the index of socially significant consumer goods prices recorded a slight increase to 100.2 points, marking its first rise in eight weeks.
Market participants are now focused on the upcoming release of data on the volume of goods and services sold.
Money market: ample liquidity keeps rates near the lower bound
Indicative money market rates remain near the lower edge of the base rate corridor, reflecting a growing liquidity surplus in the banking system:
- TONIA – 17.00%
- SWAP-1D – 11.00%
Demand at the National Bank’s deposit auction declined to 1.2 trillion tenge, down 417.5 billion tenge, but was fully satisfied at an annual rate of 18.0%.
At the same time, the National Bank’s open position increased to 7.0 trillion tenge, indicating sustained excess liquidity in the system.
Stock market: rising activity lifts the KASE index
The KASE Index gained 1.1%, closing at 7,299.3 points, while trading volume increased 1.8 times to 1.1 billion tenge, signaling stronger investor interest.
Key contributors to the index’s growth included:
- Kazatomprom (+5.7%) amid expectations of rising uranium demand following Meta’s nuclear power deal with Vistra
- Kaspi (+1.5%) supported by attractive valuations
- KazTransOil (+1.2%) on expectations of business growth
Shares of Air Astana (-0.8%) slightly limited the index’s upward movement.
Oil: geopolitics returns to the spotlight
Brent crude prices climbed to $63.3 per barrel (+2.2%) as markets reacted to heightened geopolitical risks. Among the key factors were the detention of a fifth Venezuelan tanker by US forces, escalating civil unrest in Iran, and growing concerns over supply disruptions from the Middle East.
Additional pressure came from rising tensions between Russia and Ukraine, with Russian military officials reporting the use of a hypersonic “Oreshnik” missile against targets in Ukraine.
Risk assets: strong data meets political uncertainty
Major US stock indices closed Friday at record highs, gaining 0.5–0.8%, supported by a mixed US labor market report.
The US economy added 50,000 jobs in December, below expectations of 73,000, while the unemployment rate declined to 4.4%, beating forecasts. The data reinforced expectations that the Federal Reserve may keep interest rates unchanged at its late-January meeting.
However, US index futures are now down 0.5–0.7% following reports of possible legal action against the Fed Chair.
Safe-haven assets gain demand
As uncertainty rises, investors are turning to defensive instruments:
- Gold rose to $4,501 per ounce (+0.9%)
- US 10-year Treasury yields edged down from 4.18% to 4.17%
- The US dollar index strengthened to 99.1 points (+0.2%)
KAF outlook
The Kazakhstan Association of Financiers notes that growing concerns over the independence of the Federal Reserve could become a new systemic risk for global markets. Increased political pressure on the US central bank may lead to higher volatility, stronger demand for safe assets, and more cautious investor behavior in emerging markets, including Kazakhstan.
In the coming days, markets are expected to remain highly sensitive to political signals from the US and guidance from central banks.
