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.
