The Russian stock market went down after the oil

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Last Thursday, the main Russian stock indices Mosberg (-1.36%) and RTS (-1.64%) ended with a strong decrease towards the levels of the previous closing. This clearly contributed to the unfavorable external background due to renewed doubts of investors and speculators that the US and China will be able to quickly and painlessly terminate an ongoing trade war. Another stimulus for the intensification of bilateral relations was big news about the arrest of the Finance Director of the Chinese company Huawei Technologies in Canada. The daughter of the founder of Huawei is accused by the US authorities in violation of trade sanctions against Iran.
Even more serious blow to the Russian stock market made a strong intraday drawdown of cost of oil futures. However, yesterday’s large-scale movement in contracts for “black gold” was to be expected. At the summit of the OPEC oil cartel discussed the fate of the current international agreement to limit the level of oil production. By long tradition, however, such decisions are very difficult. Yesterday, OPEC members failed to reach any agreement. This discussion continues today in expanded format, OPEC+.
As a result of yesterday’s drawdown medium-term technical picture of the indexes of RTS and Mosberg deteriorated somewhat, but not changed dramatically. It still can be assessed as neutral.
At the close of formal trading session, the December futures on the RTS index (RIZ8) went into a state of contango variable in p. 3.9, or about 0.35% relative to the reference indicator. In General, the futures market participants remain close to neutral evaluation of the medium-term prospects of the RTS index.
Amid significant drawdowns of the index Mosberg held at the end of the trading day, the most liquid stocks ended mostly lower in the range of 1-3% relative to the levels of the previous close.
Noticeably weaker the market were many representatives of the oil and gas sector: LUKOIL (LKOH RM, -1.85%), Gazprom (GAZP RM, -2.40%), Rosneft (ROSN RM, -2.05%), Tatneft JSC (TATN RM, -1.76%), Bashneft JSC (the BANE of RM, -1.47%), Bashneft-up (BANEP RM, -1.47%). Members of the local trades could not ignore the strong intraday fall in the value of futures for Brent crude. At the time of their drawdown was 5%.
Paper Sberbank JSC (SBER RM, -1.94%) were under increased pressure due to the heightened risk of sanctions and amid intraday weakening of the rouble exchange rate against the U.S. dollar. These shares continue to play the role of short-term market indicator characterizing the change in the attitude of participants to the prospects of the domestic stock and currency markets. From a technical point of view in these papers continues to fight for strong fixation above or below the important price level was 200 RUB.
The usual exception to the sector made of the protective paper Surgutneftegaz-Pref (SNGSP RM, +1.45%). These dividend stocks are traditionally in demand in moments of abrupt fall of oil prices, accompanied by a trend towards weakening of the ruble. Ordinary shares of company “Surgutneftegaz” (SNGS RM, +0.18%) also managed to avoid falling with the market. The issuing company remains largely protected from deterioration of the medium-term trends in the oil industry due to large foreign exchange savings.
In stock Magnet (MGNТ RM, +0.82%) continued a two-day attempt of correctional growth. Sales network continues implementation of the program to repurchase its own shares on the open market. Taking into account this factor in its paper retain the potential for medium-term recovery in the range of 3800-4000 RUB.
We will add that on the daily chart of these stocks formed a technical figure “triple bottom”. She doesn’t look “beautiful” and perfectly smooth. However, this does not negate the fact that we are seeing in them powerful background for the burning of the medium-term reversal up.
Much stronger market also closed papers MMK (MAGN RM, +0.93%), Rostelecom JSC (RTKM RM, +0.41%), Rostelecom-up (RTKMP RM, +0.08%), Polymetal (POLY RM, +0.71%), RussNeft (RNFT RM, +2.85%).
Before you start trading in Russia the futures for US stock indices demonstrated insignificant decline in the value within 0.2%. Contracts for Brent oil fell by 0.7%. Gold futures have increased in price by about 0.1%. Japanese stock index Nikkei225 grew by 0.8%. Hong Kong’s Hang Seng edged up 0.2%.
Tailored evening rebound in oil futures and major stock indices of the US, the external background before bidding in Russia can be characterized as uncertain or mixed.
• The index Mosberg with minor deviation within 0.3%, in the range 2405-2420 p. as the nearest supports will again be levels 2400, 2390 p. Significant resistance level will remain 2430, 2440 p.
• After the neutral start of trading the index Mosberg can go into a state of consolidation. This contributes to a fairly ambiguous external background.
• In the second half of the day in the U.S. will be published a large number of important statistical indicators. However, their importance for the local stock market will recede into the background. Participants of the Russian bid would be the expected decision of the further destiny of the current international agreement to limit the level of oil production in the OPEC format+.
Vitaly Manzhos,
Senior risk Manager,
IR “Algo Capital”