Stock markets will continue to focus on oil

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Last Friday, the main Russian stock indices Mosberg (+0.54%) and RTS (-0.10%) ended the day with an irregular growth relative to the levels of the previous close.
I must admit that positive closure is made possible only due to the strong increase in the cost of heavy stock of “Gazprom”. However, the favourable external background was able to keep the members of the local trades from sales in many liquid securities. In General, the Russian stock market is demonstrating relative weakness after the passage of the season’s dividend cut.
From a technical point of view indexes Mosberg and RTS managed to hold above Thursday’s updated medium-term lows. It creates a good chance that they will be able to consolidate close to current levels. This may contribute to the stability of oil prices, which have the support of the continuing geopolitical risk in the middle East.
Among the significant events of the end of last week, it is worth noting it is expected the decision of the Bank of Russia lowered its key rate by 25 basis points, to a level of 7.25% per annum. We did not observe the apparent response of the bidders on the specified event. However, in the medium term, it is interpreted as a positive factor for the local stock market and domestic economy.
At the close of Friday’s evening trading session September futures on the RTS index (RIU9) came to the state of backwardly a value of 10.5 points, or about 0.8% relative to the reference indicator. Futures market participants about the medium-term prospect RTS index moderately negative.
Despite a noticeable increase of the index of Masuri held at the end of the day, the most liquid stocks ended mostly lower in the range of 1-3% relative to the levels of the previous close. Again, this trend was associated with a strong increase of heavy prices of papers “Gazprom”.
The most notable movement among blue chips was continued corrective rise of Gazprom (GAZP RM, +6.95%). From a technical point of view, we watched them attempt a quick closing recent dividend gap. Information the reason for such strong increase was made by the details of the recent unusual placement of 2.9% quasicanonical shares of the gas monopoly.
The whole mentioned shareholding was sold at a discount to the exchange price (RUB 200.5) “in one hand”. Thus, a large number of potential buyers of these securities have not got at such an attractive price. The positive aspect of this transaction is a formal increase in the proportion of shares of “Gazprom” in free circulation to 46.02%, which implies a future inflow of funds into these securities from index funds.
ClA shares of Yandex (YNDX RM, +2.37%) is also significantly increased in contrast to the overall market weakness in the background of the publication of the consolidated financial results of the Issuer for the 2nd quarter of 2019. Investors and speculators are not scared quarterly net profit reduction of IT-holding to 90%. Adjusted net profit for the same period increased by 16%. Proceeds of “Yandex” at the end of the 2nd quarter and first half increased by 40%. Moreover, the forecast for revenue growth for the year 2019 of the company was increased from 30-34% to 32-36%.
Papers OGK-2 (OGKB RM, +2.57%) managed to rebound from the recent six-week low with a positive semi-annual financial statements of the Issuer for the company. Despite the slight fall in revenue by 1%, its net profit in the first half of the year increased by 30.5%. This was achieved by reducing the cost of sales as a result of the optimization of production activities.
We will add that despite the one-day gain in a specified securities remains rather unfavorable medium-term technical picture. A clear signal for medium-term purchases they can be confident only the breakout of the resistance area located in the district of 0.54-0.55 RUB
Significantly weaker than the market was closed the papers Sberbank JSC (SBER RM, -1.01%), Norilsk Nickel (GMKN RM, -1.36%), Surgutneftegaz-Pref (SNGSP RM, -1.38%), Rosneft (ROSN RM, -1.27%), Inter (IRAO RM, -2.49%).
This morning the futures on US stock indices fell moderately in the range of 0.2%. Contracts for Brent oil fell in price by 0.5%. Gold futures on the brink of positive and negative deviations. Chinese stock index Shanghai Composite lost 0.4%. Nikkei225 declined by 0.5%.
The external background before bidding in Russia can be characterized as moderately negative. This creates conditions for the opening of index Mosberg with moderate lowering.
The index Mosberg with a moderate decline of about 0.2%, near the mark 2710 p. as the nearest supports will be the levels 2700, 2690 p. Significant resistance is seen around 2730, 2740 p.
In the first minutes of trading, the index Masuri will play a moderate morning deterioration of an external background. Later he may continue the slide to the nearest significant support level, located near 2700 p.
Output relevant to the local market to foreign macroeconomic statistics today is not scheduled. Therefore, the second half of the day the key external reference point for participants of the Russian auction will remain the dynamics of oil futures. Some influence on indexes of RTS Mosberg and can also provide the paper of “Gazprom” in the case that they will continue a strong movement.
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Vitaly Manzhos,
Senior risk Manager,
IR “Algo Capital”