Rising oil prices supported the ruble

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The influence of the external background to the evening was positive: the American index S&P 500 added 1%, while the pan-European STOXX 600 grew by 0.8%. In the U.S. Congressional elections, the Republicans retained the Senate, the Democrats retook the House of representatives. This scenario is positive for risk assets in Russia, since the completion of the elections with a high probability will entail a reduction in the sanctions campaign rhetoric lawmakers. Tomorrow the fed will announce a decision on rates.
The probability to increase the range of 2.25-2.5% per annum is about 7%. The market is clearly not take in consideration the latest releases of macroeconomic data, including the labor market, and overestimates the risks associated with trade wars. However, the rate increase in the baseline scenario worth waiting for no earlier than Dec.
At the end of the day the index Mosberg rose nearly 1.4% to 2445 points, while the RTS gained 1.1% to 1164 points.
In Russia among individual liquid shares of the “VTB” (+5,7%), Russian grids (+2.7%) and MTS (+2.6 percent). The outsiders “Aeroflot” (-1,8%), Mechel (up 1.4 percent) and Surgutneftegaz (up: -1,3%).
Paper VTB all day someone aggressively bought back before the publication tomorrow of the report – volumes three times higher than average values. It is possible that management will announce the forecasts for the dividends.
Oil two main varieties, has become cheaper by between 0.8%: a barrel of Brent cost $71,9; and WTI – $61,7. The oil reserves in the U.S. rose by 5.8 million barrels. (expected +2.4 million; yesterday’s forecast API +7.8 million). Production increased by 400 thousand. a day to 11.6 mbpd. However, some support is provided by rumors of the impending agreement Saudi Arabia and Russia (in the framework of OPEC+) to reduce output to compensate for the surplus of oil in 1st half of 2019.
In the foreign exchange market United States dollar a night gained 0.1% to 66.2 RUB, and Euro increased by 0.6% to 75.9 RUB In tandem with the dollar the national currency has slightly supported by falling before the fed meeting, the dollar index (DXY).
The evening session is expected a slight strengthening of the ruble due to rising oil prices. The futures of Masuri maintains growth potential due to external background.
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Timur Nigmatullin,
Analyst
“Opening Broker”