The Russian stock market is in danger of falling open

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Before leaving for weekends with the Russian market closed with a modest gain. After intra-day rally that sent the index Masuri to new historic highs, and RTS – to 5-year, the index fell back to the deterioration of the external background, but closed in positive territory, with rising 0.33% and 0,57% respectively.
The pair dollar/ruble, which on Tuesday has updated the lows in the area 64,40 RUB on yesterday’s off-exchange trading has sharply jerked upwards, having reached the region 64,80 RUB on the combination of the strengthening of the dollar, the resumption of flight from risks and falling oil prices.

The subject of sanctions comes back

The main driver of the weakening of the Russian currency was the renewal of the sanctions rhetoric. In particular, trump said that he is considering the possibility of imposing sanctions aimed at stopping the construction of the pipeline “Nord stream-2” between Russia and Germany. It was a shock to the ruble, which until recently was strengthened including through the calm on this front. Today, when resume trading in the currency section of the Moscow exchange, the dollar/ruble will probably continue to play this negative factor, as well as further drawdown of oil and can easily get back above $ 65 RUB.
Brent fell again under the mark of 60 dollars per barrel on a weak report of U.S. Department of energy and concern about the consequences of a trade war between the US and China, which intensified after trump threatened to impose billions of dollars in tariffs against Beijing. Given the combination of bearish factors, the Russian market with the big share of probability will return to trading on a minor note, especially since the indexes are attractive to profit-taking levels. The most active sales may follow in the oil and gas sector at the head of “Gazprom” because of the threat of sanctions against the “Nord stream-2”.
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Alexander Timofeev,
Head of analytical Department,
IR “Instant”invest