Stock market: US yields attract investors

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The Russian stock market has always been dependent on the oil and gas sector, as well as geopolitical factors. Investors, including non-residents of the Russian Federation, from time to time to minimize risk choose assets that are most relevant in certain periods and phases of market trends. Given that the market drivers are stable, oil prices, interest of major market participants is directed to exporting companies in the sector. Most relevant for investors are the following companies: “Rosneft (MCX: ROSN)”, LUKOIL (MCX: LKOH), Tatneft (MCX: TATN)”, “NOVATEK (MCX: NVTK)”, which will continue active growth in the short term. On the background of reducing the risk of sanctions shares of companies related to the financial sector, can become the object of investment.
Today the Finance Ministry will place OFZ in amount of RUR 5 billion to test the market reaction and investors ‘ appetite for this product. The relative stability of the national currency, could have a positive impact on investor activity. Many expect key dates 6 – 12 November, when the United States will be elections to the Congress and the Senate and this will depend on how will react to new participants on relations between Russia and the United States. Prior to this period we can observe a reduction in the overall volatility of the Russian stock market.
U.S. stock markets closed mixed. We see absorption increasing amount of Treasury debt because the U.S. government wants to Fund a growing budget deficit that is associated with the massive tax cuts introduced in December last year. At the end of September, the Treasury sold a combined 106 billion in two-year, five-year and seven-year debt with a fixed interest rate for soft investor demand.
This week the Treasury will sell three-year 10-year and 30-year bonds worth 74 billion dollars. The rising bond yield and the trading sector between Washington and Beijing has led to the growth of the dollar, which led to a reduction in demand for Treasuries abroad in recent months. The growing income in the United States attracted some foreign investors, but the high dollar made it more expensive to hedge against other currencies. Regarding stock companies, Netflix (NASDAQ: NFLX) and PayPal (NASDAQ: PYPL) are one of the first hot stock for investors. Next week both companies plan to submit their results for the third quarter.
Despite the fact that over the past three months, both the action behind (Netflix dropped 13%, and PayPal has fallen by 7%), investors should not underestimate the pressure on these companies. Reduce only 12 months, and both of these stocks were huge winners. Over the past year, Netflix and PayPal have grown by about 79% and 21% respectively. Both stocks benefited from strong growth of their underlying businesses. Investors also want to see how margin deposits Netflix – an indicator of segmental income less cost of revenues and marketing costs associated with the segment – oriented as on Netflix in the US and international streaming company.
Profitability was a bright spot for Netflix lately, and was 39.1% and 15.5% in the U.S. and abroad, respectively, in the second quarter. These figures increased from 37.2% to minus 1.1% in the quarter last year, respectively. After the publication of quarterly reports Netflix (NASDAQ: NFLX) and PayPal (NASDAQ: PYPL) can be determined from the trend of the movement of these shares by the end of this year.
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Gaidar Hasanov
Expert
“International financial center”