Market Roundup

Bullish sentiment prevailed in Russian trading Friday ahead of the long weekend despite a downturn at the open. Specifically, domestic indices gained support from an uptick in commodity stocks, with the MICEX Index advancing 1.2% and the RTS Index edging up 0.9%. O&G plays moved higher on rising oil prices, as Surgutneftegaz added 2.3%, Novatek grew 2.2%, Gazprom rose 2%, Rosneft jumped 3.1% and Lukoil ended 1.7% higher. Banking names turned in mixed performances, with Bank VTB climbing 1.5%, Sberbank prefs inching up 0.2% and Sberbank commons dropping 0.9%. Metals headed north on the back of rising commodity markets, as Norilsk Nickel and NLMK gained 1.9%, Severstal and MMK closed 0.7% higher. Uralkali (off 3.6%) topped the decliners on news of a methane blowout at its mine and speculation the company could face further monetary claims relating to the flooding of the Berezniki mine.

ADRs of Russian issuers moved mostly higher on Monday, but declined on Tuesday. After two sessions ADRs remained near Friday’s close.

US trading was bearish Tuesday, with the S&P 500 Index closing 1.2% in the red. Commodity and financial stocks underperformed, while consumer issuers outperformed. Bearish sentiment spilled over to Asian markets this morning, with some indices losing over 1.5%. As for commodity markets, Brent is trading around USD 77-78/bbl, while primary metal groups look mixed.

We believe Wednesday morning's news flow is neutral for the Russian stock market and do not expect any pronounced trends at the open. As for drivers, US home sales numbers are due out in the second half of today’s session.

Bearish sentiment held sway on the Russian stock market Thursday amid a strengthening dollar and retreating oil prices, as the RTS Index dropped 0.78% and the MICEX Index eased 1.13%.

Falling crude contracts put pressure on O&G plays, as Gazprom gave up 1.7%, Rosneft lost 0.9% and Lukoil edged down 0.2%. A stronger dollar mainly affected domestic banking names, with Sberbank pulling back 3.1% and Bank VTB declining 1.6%. Steels trended in line with the market, as Severstal fell 0.9%, NLMK sagged 1.7% and MMK declined 2.1%. RusHydro stocks gained 2.9% on confirmed reports the company is prepared to restart 2 turbines at the Sayano-Shushenskaya HPP by March.

US stocks closed in positive territory yesterday. Bullishness stemmed from positive manufacturing numbers and a spike in oil prices after the Russian market closed. Asian indices are moving largely south today on an unexpected decision by the US Fed to raise the discount rate from 0.50% to 0.75%, which shows that the central bank aims to gradually withdraw stimulus measures. The petroleum market also showed a negative reaction to the Fed’s rate decision, with oil contracts sinking. Brent is trading at USD 76.80/bbl.

According to our estimates, Friday morning's news flow is unfavorable for the Russian stock market. Falling oil futures will put pressure on O&G plays. The Fed’s move will most likely exert an adverse impact on domestic banking names. As for drivers, UK retail sales numbers and US CPI could impact market sentiment today.

Domestic equity benchmarks finished on a mixed note Wednesday despite upbeat numbers stateside and bullishness on global stock exchanges. Stocks were mainly under pressure from retreating oil prices, as the RTS Index inched up 0.27% and the MICEX Index eased 0.54%.

O&G names trended in line with oil prices, as Gazprom lost 0.5%, Rosneft dropped 0.9% and Lukoil tumbled 1.1%. Banking names moved lower along with the market, as Sberbank fell 0.9% and Bank VTB edged down 0.4%. Steel stocks closed mixed, as Severstal shed 0.3%, MMK added a meager 0.2% and NLMK slid 1.9%.

US benchmarks saw robust gains on Wednesday on the heels of higher-than-anticipated new home starts and manufacturing numbers. Asian indices are moving south today on account of weak earnings reports, with metals underperforming. Oil contracts have been showing pronounced volatility, easing as the dollar strengthens. Brent is currently trading around USD 75.90/bbl.

According to our estimates, Thursday morning’s news flow looks unfavorable for the Russian stock market. O&G plays could underperform as oil is in decline. A pullback in global metal giants could put downward pressure on domestic metals, Polyus Gold and Polymetal in particular, with additional pressure coming from dwindling gold prices. As for the drivers, we advise investors to keep an eye on US jobless claims and PPI. The US Energy Department is scheduled to release its inventory report at 7 pm Moscow time today, which could whip up trading on the oil market.

Russian equities were largely bullish on Tuesday, with the domestic benchmarks taking their cues from rising global stock and commodity exchanges. As a result, the RTS Index surged 3.06% and the MICEX Index soared 3.20%.

Rallying crude prices stoked gains, with Gazprom climbing 4.7%, Rosneft advancing 3.4% and Lukoil adding 2.3%. Banking names slightly outperformed, as Sberbank jumped 3.6% and Bank VTB closed 4.4% higher. Steel stocks moved higher in stride with the market, with Severstal surging 4.3%, NLMK rising 3.7% and MMK adding 2.1%. Krasnoyarsk HPP stocks rocketed 28.7% on confirmed reports the parent company mulls going public.

On Tuesday, after a holiday, US indices moved north, with the S&P 500 Index adding 1.8%. Bullishness stemmed from better-than-expected economic numbers and strong financials posted by Barclays. Asian equities are on the rise after yesterday’s gains stateside and positive performances of commodity markets. Optimistic sentiment also impacted crude contracts, which are trading sharply higher, with Brent trading at USD 75.90/bbl.

We think Wednesday morning’s news flow looks favorable for the Russian stock market. Most likely, we’ll see robust gains across the board at the open. O&G plays could lead the market higher on the back of a spike in crude. As for drivers, US new home sales and manufacturing numbers could shape market sentiment today.

Domestic equities staged a show of strength on Monday amid bullishness on European markets and stabilizing crude prices, with the RTS Index adding 0.89% and the MICEX Index advancing 1.1%.

Rising crude lent support to O&G plays. Lukoil (+2%) led the gainers after coming out with robust FY 2009 financials, while Gazprom edged up 0.9% and Rosneft rose 1.4%. Banking stocks moved higher along with the market, as Sberbank was up 0.5% and Bank VTB closed 0.9% higher. In the steel segment, Severstal (up 5.2%) locked in sizeable gains on recommendation upgrades by a number of major investment banks. Other steel stocks moved in line with market trends, as MMK jumped 0.8% and NLMK added 1.2%.

US markets were closed for Presidents Day on Monday. Asian equities are heading higher today on upbeat earnings reports released by regional corporations. Commodities are also trading up, and precious metals are seeing strong demand. After Monday’s volatility crude futures are trending resolutely north today, with Brent trading around USD 73.10/bbl.

We think Tuesday morning’s news flow is favorable for the Russian equity market. Commodity plays look set to outperform today. Rising gold prices could push up gold stocks. If oil continues on the upward track, O&G plays could see gains. As for today’s drivers, we suggest keeping an eye on UK CPI data, due out at 12.30.