Russian market set for growth
Last week brought the Russian stock market bearish sentiment. The MICEX index went down below $ 2800, however, given the large-scale growth over the previous eight sessions, this reduction is well within natural correction due to several internal and external factors, including weak macroeconomic statistics on the US and reduced economic activity in Russia.
We will remind that on Thursday the Central Bank of Russia has expectedly lowered the discount rate to 7% and confirmed the likelihood of further weakening of inflation pressure until the first quarter of 2020. It should be noted that the regulator has lowered the forecast for GDP growth for the current year with 1-1,5% to 0.8-1.3 percent. In this context, most likely, the Bank will continue to focus on easing monetary policy to stimulate the flagging economy, the benefit of inflation while it allows.
Lower rates combined with the improvement in the geopolitical situation and the preservation of the interest in risky assets form a favorable backdrop for the stock market, allowing you to count on the renewal and continuation of the upward trend in the medium term. First of all, will win the “blue chips”, providing investors with stable dividend income and securities with low risk.
The ruble’s all good
The Russian currency steadily grew almost all of last week, with even a decrease in the discount rate of the Central Bank are unable to deploy the ruble in the bearish direction. This morning the ruble also opened higher, at around 65.53 rubles per dollar. At the moment pair dollar/ruble is trading near opening levels at the same time, most likely, the upward trend will continue to gain momentum under the influence of a favourable macroeconomic environment.
Oil rises in price on the background of reducing the activity of American oil companies and reducing the number of active drilling rigs. So, Brent crude oil for the week rose in price by almost 6% and is now trading at around $ 62 per barrel. WTI crude oil has appreciated by 4% to 57.00 per barrel.
In addition, the US and China has shown willingness to sit down at the negotiating table, reducing the degree of geopolitical tensions. It may also positively influence the dynamics of the Russian stock market and support the growth of the ruble.
Director for analysis of financial markets and macroeconomics