Market Roundup

Domestic equities kicked off the week with modest gains amid bullishness on commodity exchanges, but sell-offs continued after lunch. As a result, domestic liquid names ended in negative territory, with the RTS Index sagging 2.54% and the MICEX Index losing 2.47%. An upturn in oil contracts failed to shore up O&G plays, as Gazprom sank 3.8%, Rosneft slid 3% and Lukoil declined 2.3%. Banking names moved south along with the market, as Sberbank plunged 4.9% and Bank VTB pulled back 2.6%. Steels slightly outperformed on the heels of a rebound on commodity exchanges, as Severstal dipped 3.3%, NLMK dropped 1.4% and MMK lost 1.5%.

US equities were again in bearish mode Monday, with the Dow dipping 1%. Uncertainty about the ability of some European countries to cope with their budget deficits continues to put downward pressure on the market and banking names in particular. Asian markets also look bearish today, with financials leading the decliners. Commodity markets are on the rise, but oil trading is marked by heavy volatility, with Brent trading around USD 70/bbl.

We think Tuesday morning’s news flow looks ambivalent for the Russian equity market. On the one hand, weakness on US and Asian exchanges will put pressure on the market. On the other hand, bullishness on commodity exchanges and in US index futures will lend support. Domestic banking stories could slightly underperform today as global financials posted losses. Rising gold futures could have a positive impact on gold plays.

Domestic equity benchmarks sustained losses on Friday amid weak performances of commodity exchanges and prevailing worries about the financial stability of some European countries, as the RTS Index plunged 3.55% and the MICEX Index declined 2.88%.

O&G plays moved lower amid falling oil prices, as Gazprom eased 2.3%, Rosneft pulled back 3.5% and Lukoil tumbled 2.7%. Banking names experienced the heaviest sell-offs, as Bank VTB dove 4.5% and Sberbank slid 2%. Steels underperformed, as Severstal sank 5.5%, NLMK plummeted 5.4% and MMK decreased 3.4%.

US indices ended higher Friday. Hi-tech stocks saw robust demand. US jobless claims turned out to be ambiguous and produced no impact on market sentiment. Asian benchmarks are largely bearish today due to weak earnings reports, with financials from Panasonic and Casio leaving investors disappointed. Crude is edging up after Friday’s major pullback. Brent is trading at around USD 70.10/bbl, while metals are on the rise.

We believe Monday morning's news flow is to a large extent favorable for the Russian stock market. There is a good chance for an upward correction today after Friday’s downturn. Higher oil prices could lend support to O&G plays and the market as a whole. No important economic data are expected for publication today.

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.