The Russian stock market went into a nosedive in external conditions

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On Monday, the main Russian stock indices Mosberg (-1.42%) and RTS (-1.85%) ended with a strong decrease towards the levels of the previous closing. The objective of the incentive for this was the unfavourable conditions in the external background. First and foremost, this has resulted in negative dynamics of oil prices. Futures for Brent crude yesterday slipped again to the next significant support located in the area of price level of $60 per barrel.
Thus, the recent news about the upcoming reduction of the production of “black gold” in the format of OPEC+ has not yet become the occasion for a radical improvement in sentiment in the oil market. A positive effect will emerge only in the medium term. Meanwhile, last week in the US was set a new record of daily oil production, which increased to 11.7 million barrels.
A negative role for the local stock market is played and the ongoing concerns about the slowdown in the world’s largest economies by the continuing trade war, the United States and China. European stocks were under the yoke of the regional problems. The most pressing of these were the news about the riots in France and the transfer of the vote for Brexit in the House of Commons of the United Kingdom.
In yesterday’s sell-off in Russian stock indices of RTS and Mosberg noticeably stepped down from her month highs reached last week. Thus, medium-term technical picture looks neutral again. The local stock market continues to “nag” investors and speculators, trend-oriented trading strategies.
At the close of formal trading session, the December futures on the RTS index (RIZ8) came in as a moderate backwardly size 6.1 p., or about 0.5% relative to the reference indicator. Futures market participants remain negative assessment of the medium-term prospects of the RTS index.
Given the strong subsidence 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.
Expected weaker market traded many representatives of the oil and gas sector: LUKOIL (LKOH RM, -1.77%), Rosneft (ROSN RM, -2.39%), Tatneft JSC (TATN RM, -2.07%), Gazprom Neft (SIBN RM, -2.88%). Positive price effects from the extended agreement on the limitation of the level of oil production in the OPEC format+ manifest for several months. And before that, Russian oil companies will have a proportional reduction in domestic production in accordance with the terms of an international oil deal.
Shares of ALROSA (ALRS RM, -2.93%) outperformed the market in its fall upon the publication of the current sales results of the Issuer. According to recent data of the implementation of the diamond production in November declined in value terms by 18% in comparison with November of last year. The sales growth in US dollars since the beginning of 2018 was 3.7%.
MTS (MTSS RM, -3.16%) accelerated its two-day decline, and once again reached multi-month low. They remain under pressure in connection with talk about the possible reduction in dividends. A telecommunications company may pay a large fine as part of the settlement of the protracted “Uzbek” case.
In that paper, Ribbon, etc. (LNTA RM, -6.46%) worsened on the eve of the drawdown. Aggressive sales in these papers emerged after the deterioration recommendations on them to “sell” on the part of one of the largest American investment banks. In addition, investors and speculators are not pleased with the news of the change of the General Director of the retail chain.
One of the few significantly risen in price securities were the shares of MMK (MAGN RM, +0.49%). A clear positive for them was the message that the international rating Agency S&P Global Ratings has assigned the Issuer a long-term and short-term ratings in national and foreign currencies at “BBB-/A-3”. The Outlook on these ratings are stable.
Significantly stronger market also closed papers of Polyus (PLZL RM, +3.65%), SAFMAR-AO (SFIN RM, +3.16%), Russian grids JSC (RSTI RM, +1.06%), the PEAK (PIKK RM, +0.31%).
Before you start trading in Russia the futures for US stock indices show a moderate decline in the value within 0.3%. Contracts for Brent crude rose by 0.2%. Gold futures have increased in price of about 0.2%. Japanese stock index Nikkei225 decreased by 0.3%. Hong Kong’s Hang Seng has not changed his values.
The external background before bidding in Russia can be characterized as uncertain or mixed. This creates the conditions for a neutral open ruble index Mosberg.
• The index Mosberg with minor deviation within 0.3%, in the range 2390-2405 p. as the nearest supports will be the levels 2380, 2370 p. Significant resistance is seen around 2420, 2430 p.
• After the neutral start of trading the index Mosberg can go into a state of sideways movement. This contributes to uncertain this morning as the external background.
• In the second half of the day is the key external reference point for participants in the local trading will remain the dynamics of oil prices. Some influence on the course of trading may also have the publication of the November value of the producer price index in the USA (16.30 GMT).
Vitaly Manzhos,
Senior risk Manager,
IR “Algo Capital”