Market Roundup

Domestic trading turned bearish on Thursday amid retreating oil prices. Liquid names moved lower all across the board. As a result, Russian indices dropped over 2%, with the MICEX Index giving up 2.5% and the RTS Index pulling back 3%.

The day’s top decliners were regional telecoms, which had seen robust gains earlier in the week, with CenterTelecom sliding 6.7% and Volgatelecom declining 4.7%. Polymetal, up 1.8%, led the advancers despite falling gold contracts. OGK-5 also moved higher, adding 0.8%. O&G plays ended in negative territory, with Tatneft falling 3.5%, Gazprombank and Gazprom skidding 3.2%. Pipeline monopoly Transneft experienced a sell-off, down 3.9%, on news of a pipeline accident in the Amur region. In the banking sector, Sberbank (-3.8%) fell in line with the market, while Bank VTB inched down 0.3%. Steel and coal stocks followed market trends, as NLMK dove 3.8%, Severstal plunged 4.1%, Belon declined 3.6% and Mechel closed 2.3% lower.

US equities remained bearish Thursday, with key benchmarks losing an average 3%. The S&P 500 Index closed 3.1% in the red. Tech stocks outperformed, while commodity and financial names underperformed. Negative sentiment carried over into Asian trading this morning with the contraction in key regional benchmarks averaging 2%. As for commodity markets, Brent futures dropped to around USD 72/bbl, while primary metal groups look mixed.

According to our estimates, Friday morning's news flow is decidedly unfavorable for the Russian equity market and we expect stocks to trend lower at the open. As for drivers, some key US employment market data are due out in the second half of today’s session.

Bullish trends held sway on the Russian stock market Wednesday. However, near the final bell investors opted to take profits in regional telecoms and commodity stocks, as a result of which the key benchmarks ended on a mixed note, with the MICEX Index edging down 0.4% and the RTS Index advancing 0.6%.

Uralkali (+4.3%) stood out as the day’s top gainer on investor expectations the price environment on the potash fertilizer market will improve. OGK-5 also saw robust gains, up 3.4%. O&G plays moved largely south under pressure from retreating oil prices, as Lukoil dipped 0.9%, Rosneft tumbled 1.8% and Surgutneftegaz eased 0.2%. The strongest gains in the sector were achieved by Gazprom Neft, up 0.7%, on news the oil producer successfully challenged the RUB 4.7 bn fine sought by FAS. Domestic banking names followed the market, with Sberbank inching up 0.1% and Bank VTB falling 0.3%. Steels ended mixed, with Severstal (+1.4%) and MMK (+0.7%) outperforming, while NLMK gave up 1.8%. Coals also continued to rise, as Mechel added 2.9% and Belon jumped 2.2%.

US trading was bearish Wednesday, with the S&P 500 Index ending 0.6% lower. Tech stocks outperformed, while financials led the decliners. Negative sentiment spilled over to Asian markets this morning with the decline in regional benchmarks averaging 0.5%. As for commodity markets, Brent futures pulled back, hovering around USD 75-76/bbl, while primary metal groups look mixed.

We believe Thursday morning's news flow is neutral for the Russian stock market and do not expect any clear-cut trends at the open. As for drivers, the US Labor Department is set to release the jobs report in the second half of today’s session.

Domestic equity benchmarks were on an upward track Tuesday. Liquid names kicked off to the upside, racking up gains held for the rest of the session. The benchmarks added over 1%, with the RTS Index advancing 1.9% and the MICEX Index climbing 1.4%. The bullish trend was stoked by rising prices on commodity markets and new signals the US economy is recovering.

Fixed-line telecoms led the outperformers for the second session in a row, with CenterTelecom shooting up 7.2%, Rostelecom soaring 5.3% and VolgaTelecom surging 4%. O&G plays move higher along with the market, as Gazprom Neft added 2.2%, Surgutneftegaz and Lukoil jumped 1.5%. Rosneft, up 3.6%, fared better than other oils, winning back some of its losses from previous sessions. Domestic banking names slightly underperformed, with Sberbank edging up 0.4% and Bank VTB ending 1.3% higher. Steels, except for MMK (-0.3%) that released ambiguous Q4 numbers, marginally outpaced the market, as Severstal added 2.3% to its market cap, while NLMK advanced 1.6%. Coal stocks also reaped gains on the back of expectations that coking coal contract prices could be revised upward, as Mechel bolted up 5.1%, and Belon gained 2.5%.

US equities remained bullish Tuesday, with the S&P 500 Index closing 1.3% higher. Pharmaceuticals and consumer stocks led the market higher. Favorable trends spilled over to Asian markets as well, with gains in key regional indices averaging 1%. As for commodity markets, Brent futures made a solid comeback, trading around USD 75-76/bbl, while primary metal groups look mixed.

According to our estimates, Wednesday morning's opening should be upbeat for Russian equities. We expect commodity stocks to gain momentum. O&G plays stand a good chance to outperform today. As for drivers, US jobless claims are due out in the second half of today’s session.

Although domestic plays slid 1% in the first half of the session, the benchmarks closed with marginal losses, as the RTS Index and the MICEX Index edged down 0.2%. This trend was driven by an upturn on European and US exchanges in the second half of Monday’s session and stoked by new signals showing the American economy is back on the recovery track.

Regional telecoms led the gainers Monday on news telecom tariffs were hiked, as CenterTelecom jumped 4.4%, Volgatelecom shot up 8.1% and Uralsvyazinform climbed 5.3%. O&G plays drifted lower on falling crude prices, as Gazprom sank 1.8%, Tatneft tumbled 1.5% and Rosneft ended 1.2% lower. Only Gazprom bucked the trend, adding 1.8% after the release of 9M 2009 IAS financials. The gas giant’s financials cheered investors. Banking plays saw steeper-than-average losses, as Sberbank dropped 0.8% and Bank VTB dipped 0.7%. Steels were among the top decliners, with Severstal slipping 1.2%, NLMK falling 2.1% and MMK ending 1.1% in the red. Steels declined amid price movements on commodity markets.

US equities moved higher Monday, with the S&P 500 Index closing with a 1.4% gain. Upside was triggered by data showing improved manufacturing in the country and robust numbers released by oil giant Exxon Mobil. Commodity stocks outperformed the market. Asian exchanges look bullish Tuesday, with regional benchmarks advancing as much as 1.5%. On the commodity market, oil trended higher on optimism the US economy is recovering, with Brent topping USD 73/bbl and primary metal groups showing mixed performances.

According to our estimates, Tuesday morning's news flow looks favorable for Russian stocks. We expect commodity stocks to rally, which means that O&G and metal names look poised to outperform today. As for the drivers, US December auto sales and retail sales numbers are due out during the second half of today’s session.

Russian equity benchmarks closed higher Friday on better-than-expected economic data stateside and bullish opening on US markets, as the RTS Index and the MICEX Index edged up 0.9%.

O&G plays looked mixed, as Gazprom gained 2.3% on news the gas dispute with Poland was settled, while Lukoil advanced 1.9% on news the oil major discovered a new oilfield in the Perm region. As for other oils, Surgutneftegaz gave up 1.5% and Rosneft dipped 0.5% mainly due to the situation surrounding tax holidays for East Siberian oilfields, which have so far been limited to March 1, 2010. Banking names outperformed, with Bank VTB and Sberbank adding 1.5% probably on a stronger ruble. Steel plays saw losses under pressure from a possible contraction in steel product prices, as Severstal inched down 0.2%, NLMK tumbled 0.8% and MMK dipped 0.5%.

The bears were in the driver’s seat in the US Friday, with the S&P 500 Index closing 1% lower. Commodity and banking names underperformed. Stocks retreated despite favorable economic data. Bearish sentiment prevails on Asian stock markets Monday, with the key indices losing over 2%. A rising greenback continues to pressure commodity markets, as Brent is heading towards USD 71/bbl and main metal groups are still trading in negative territory.

As we can see, Monday morning's news flow looks unfavorable for Russian stocks. We expect commodity stocks to continue their descent. By contrast, telecoms could outperform. As for drivers, the US Department of Commerce is set to release December 2009 construction spending data in the second half of today’s session and market players expect the downtrend in the US construction sector to slow down.