The Russian stock market will be neutral at the opening

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On the background of mixed dynamics of trading futures on the world markets when the Asian futures are down 0.6%, and American and European – are rising 0.2%, we expect a neutral open on the Russian market. Today will be published preliminary data on new jobs outside the c/s from ADP and on business activity in the non-manufacturing sector. It is projected that new jobs created in June increased to 190 thousand against 178 thousand in may, while business activity fell slightly from 58.6 to 58.3 points.
We believe that the consensus forecast indicates a stable performance for the Jun, which plays in favor of the dollar. So on Friday, official data may be better than their original values. In addition, investors expect that the minutes of the June FOMC meeting will help with the determination of the rate of increase of the upper level of the fed funds rate before the end of 2018.
In turn, will increase the probability of a rate hike in September-November to 2.25%, based on the calculation of the futures rate. It can be a catalyst for increasing the yield of U.S. government bonds, which will attract investors and create demand for dollars. At the same time, in the moment Euro strengthened against the dollar by 0.45% to $1.17 for the Euro due to reports that some members of the ECB talking about raising interest rates in September and October 2019. On Thursday, ECB officials will speak at the economic conference in Vienna, which could support the Euro.
High oil prices support the ruble is weak, as the regular tweets of the US President calling for OPEC to reduce oil prices unnerving investors, so they don’t know the further actions of the American authorities regarding the oil. USA needs cheap oil to reduce the final cost of products. It is a stumbling block.
Thus, if today’s data is US Department of energy for crude oil inventories will show a decline, it will support prices for “black gold”. However, against the ruble plays a seasonal weakening of the current account and currency purchases by the Central Bank of the Russian Federation for the Ministry of Finance, which reduced the amount of 32 billion rubles to 347,7 billion rubles per month, or 15.8 billion. It is approximately 7.34% of the average volume of transactions in one day on Masuria in the pair dollar/ruble calculations “tomorrow”.
Viktor Veselov,
Chief analyst,