Market Roundup

Russian equities posted gains on Tuesday on the heels of an upturn in crude futures, with the RTS Index adding 1.11% and the MICEX Index advancing 0.87%.

O&G names took their cue from the oil market, as Gazprom edged up 0.8%, Rosneft rose 0.6% and Lukoil closed 1.3% higher. In the financial segment, Sberbank saw strong demand, up 2.7%, while Bank VTB advanced 0.7%. Steels trended in stride with the market, with Severstal climbing 1.4%, NLMK inching up 0.4% and MMK jumping 0.5%. Uralkali plunged 5.6% on news the government mulls introducing export duties on potash chloride.

US benchmarks saw moderate gains on Tuesday. The market gained support from news Greece is prepared to take firm measures to tackle its budget deficit. Asian markets are higher on this news today. After Tuesday’s rally crude futures corrected slightly down, with Brent trading around USD 78/bbl.

According to our estimates, Wednesday morning's news flow looks largely unfavorable for the Russian stock market. A pullback in US index futures and retreating oil prices will put pressure on the market, including O&G plays. With gold rising, gold miners could slightly outperform today. EU retail sales numbers due out later could impact market sentiment. The release of the US mid-week inventory report is an important event for the petroleum market.

Domestic equities trended mostly higher Monday on the back of favorable data from Europe and the US, with the RTS Index advancing 1.34% and the MICEX Index rising 1.77%.

O&G plays climbed in line with the market amid heavy volatility in oil futures, as Gazprom edged up 0.4%, Rosneft added 1.7% and Lukoil grew 1.8%. Domestic banking names, which had slightly lagged behind the market in recent sessions, topped the list of outperformers, with Sberbank soaring 5.2% and Bank VTB gaining 2.6%. Steels saw strong demand, as Severstal gained 2.5%, NLMK jumped 3% and MMK added 0.5%.

US indices added an average 1% on Monday. Bullish trends stemmed from macroeconomic data, with investors pleased with growing consumer spending in the United States. Against this backdrop, Asian exchanges are also heading north and Japan’s falling unemployment turned into an additional upside driver. Crude contracts headed lower on fears fuel stockpiles would rise in the US and the greenback would strengthen. Brent is currently trading around USD 76.80/bbl.

We think Tuesday morning’s news flow looks ambiguous for the Russian equity market. Upside on global stock exchanges will shore up domestic indices, but retreating oil prices will likely put pressure on O&G plays and the market, as a whole. As regards market movers, PPI data from the Eurozone are due out today.

Domestic equities saw modest advances on Saturday as foreign markets were closed for the weekend, as investors looked to domestic fundamentals. As a result, the RTS Index gained 1.48% and the MICEX Index edged up 0.67%.

O&G names closed mixed, as Gazprom inched up 0.1%, Rosneft and Lukoil dipped 0.1%. Heightened demand was seen in domestic banking plays, with Bank VTB gaining strength from the successful Eurobond placement, as Sberbank rose 1.5% and Bank VTB climbed 2.5%. Demand for steel names looked patchy, as Severstal increased 0.7%, NLMK and MMK lost 0.3%. Akron surged 5.5% on a spike in nitrogen fertilizer prices.

Asian markets look bullish today, with metals leading the advancers. Demand for metals grew on expectations that deliveries of raw material from Chile will contract after the recent devastating earthquake. Crude futures kicked off the week with mild losses on account of a stronger dollar.

We believe Monday morning's news flow looks essentially favorable for the Russian stock market. Bullish metals and a rally in global metal issuers could push up domestic metal plays. O&G plays could slightly underperform amid retreating oil prices. As for the drivers, today investors are advised to keep an eye on unemployment numbers from the Eurozone and the US construction spending report.

The Russian stock market saw buying resume on Friday, with liquid names posting gains across the board. As a result, the benchmarks ended over 1% higher, with the MICEX Index and the RTS Index adding 1.3% each.

O&G plays trended up with the market amid rising crude prices, as Lukoil gained 2%, Surgutneftegaz climbed 2.1% and Rosneft jumped 1.7%. Hefty gains were seen in Tatneft (+5.5%) and Surgutneftegaz (+4.7%) prefs, as investors expect generous dividends from the oil producers. Banking names mainly underperformed, with Sberbank edging up 0.4% and Bank VTB advancing 0.7%. Metals outperformed on recovering base metal prices, as Severstal climbed 3.3%, NLMK and Norilsk Nickel added 2%. Belon (up 4%) and MMK (a 4.6% surge) led the advancers in the metals sector on news that Belon would become a primary coal supplier for MMK, meeting around 70% of the metal maker’s coal needs.

US equities saw modest upside on Friday. The S&P 500 Index ticked up 0.1%, with financial and commodity stocks outperforming and consumers underperforming. In commodities, Brent futures are trading in the range of USD 77-78/bbl and primary metal groups are on the rise.

According to our estimates, Saturday’s morning's news flow looks moderately favorable for Russian stocks and we expect most liquid names to open higher, especially metals amid rising base metal prices and also stocks that could offer generous dividends. Today is a catch-up business day after the long holiday weekend in Russia, while European, Asian and US markets are closed as usual.

Russian stocks continued their descent on Thursday on investor concerns about the Greek economy and an unexpected increase in last week’s jobless claims in the US. Stocks trended down right from the opening bell. As a result, the benchmarks closed the session more than 2% lower, with the MICEX Index losing 2.1% and the RTS Index giving up 2%.

O&G plays slipped into negative territory on retreating oil prices, as Novatek skidded 4.5%, Gazprom sank 3.2%, Surgutneftegaz declined 2.5% and Rosneft fell 1.4%. Banking names moved lower in line with the market, with Bank VTB pulling back 3.8% and Sberbank ending 1.5% in the red. Metals also saw losses, as Polymetal edged down 0.5%, Severstal dipped 2.1% and NLMK eased 1.9%. Coal miners led the day’s standout decliners, as Mechel plummeted 4.9% and Belon plunged 3% on investor expectations of a seasonal weakening of demand for thermal coal. Telecoms also took a hit, with CenterTelecom shedding 3.9% and Rostelecom declining 3.1% as investors sold off these shares aggressively.

US trading was marked by moderate negativity on Thursday, with the S&P 500 Index closing 0.2% in negative territory. Commodities outperformed, while telecoms underperformed. Asian markets look bullish this morning, with some indices adding over 1%. As for commodity markets, Brent is trading below USD 77/bbl, whereas primary metal groups are on the rise.

According to our estimates, Friday morning's news flow is moderately favorable for Russian stocks and we expect most liquid names to kick off higher, especially metals on the heels of rising base metal prices. As for the key drivers, updated US GDP numbers for 4Q 2009 are due out in the second half of today’s session.