The ruble will support Russian stocks
The retreat of the ruble caused by the discussion of a new package of sanctions that has the potential to stall against the background of rapid growth of the Asian markets. The Russian currency has halted its retreat at 66 to the dollar and 75 to the Euro.
The sharp rise in China’s markets caused by news on the progress of trade talks, spurring demand for risky assets. Due to this amplified the rally in emerging markets. Pair with the ruble also do not stand aside from this movement, benefiting from a General strengthening of optimism. Recall that emerging markets are a critical source of demand growth for metals and energy are the main export goods of Russia.
Increase by 3% on Friday and Monday, with Chinese indices are able to support demand for the ruble against the single currency. The dollar situation is somewhat more complicated: the global FX market, USD shows a pretty clear increase. In favor of dollar growth – stronger GDP growth, published at the end of last week, in contrast with the serious slowdown in Europe and other parts of the world. In these circumstances, more and more investors lay in wait for the softening tone from the ECB and other major Central banks, at the same time suggesting that the fed is already sufficiently softened its rhetoric to continue to retreat does not intend.
Still, in our view, such a rally should be treated with greater caution. Growth of quotations has gone too far, making the key indices are vulnerable to a correction.
These same fears can lead to the fact that the Russian currency will not be able to make full use of external positive, putting the decline of the ruble on pause for a while, while maintaining the vulnerability in the event of correction in markets.