Market Roundup

Russian equity benchmarks moved higher Thursday on groundswell of support following the US President’s State of the Union speech which highlighted a recommitment to economic stimulus measures through tax benefits and subsidies. As a result, the RTS Index advanced 1% and the MICEX Index added 1.1%.

Steels led the gainers, especially stocks of US-oriented businesses, with Severstal soaring 6.2%, NLMK jumping 4.9% and MMK adding 1.1%. O&G plays advanced largely along with the market, as Gazprom edged up 0.2%, Lukoil grew 1.1% and Rosneft climbed 1.5%. Banking names also moved higher, while Bank VTB stood out (up 3.2%) and Sberbank added 0.6%. In view of falling gold prices precious metal stocks posted losses, as Polyus Gold declined 1.4% and Polymetal dipped 0.8%.

Bearish sentiment prevailed in US trading Thursday, with S&P 500 Index ending 1.2% lower, while commodity and hi-tech stocks underperformed. Investor worries about possible monetary tightening put pressure on the market. Market players read in the Fed’s comments hints of future interest rate hikes. Negative trends in the United States spilled over to Asian trading floors as well, with losses in regional benchmarks reaching 2%. A steadily rising greenback continued to put pressure on commodity markets, as Brent dropped to USD 72/bbl and industrial non-ferrous metals continued to slide.

As we can see, Friday morning's news flow look unfavorable for Russian stocks and we expect all of Thursday gains to be erased in early trading. Commodity plays could come under the heaviest pressure. Telecoms and power utilities look set to outperform. As for drivers, US GDP numbers for 4Q 2009 (consensus forecast calls for a 4.7% increase) are due out in the second half of today’s session.

Domestic benchmarks posted modest gains on Wednesday, with the RTS Index inching up 0.1% and the MICEX Index advancing 0.5%, but worse-than-expected numbers stateside capped the uptrend in the second half of the session.

O&G plays saw mostly gains, with Gazprom rising 0.3% and Lukoil edging up 0.2%. Rosneft (down 1.5%) bucked the upturn on reports that tax holidays for East Siberian oilfields could be called off. Domestic banking names outperformed, with Bank VTB rising 1.1% and Sberbank ending 0.7% higher. Ferrous metal stocks looked mixed, as Severstal dropped 0.3%, NLMK gained 2.4%, MMK slipped 0.5% and Belon dipped 0.6%. After a fairly long hiatus RusHydro turned in a solid performance, soaring 5.2%.

US stocks moved higher Wednesday, with the S&P 500 Index jumping 0.5%. The Fed’s positive statements and a Barack Obama’s state-of-the-nation address, in which he called for further economic stimulus efforts, cheered market players. Asian markets are heading north today, with gains reaching 1-2%. Commodities look bearish on a stronger dollar, with oil hovering around USD 73/bbl and nearly all industrial metals losing value.

According to our estimates, Thursday morning's news flow is moderately favorable for Russian stocks. We expect banking and steel stocks to outperform today, while O&G plays and Norilsk Nickel could come under pressure owing to a contraction in commodity markets. 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 trended down Tuesday after a pullback on global markets, with the RTS Index plunging 2.8% and the MICEX Index dropping 2.2%. The main reason for yesterday’s negativity is still investor concerns about the impact of state regulation on the pace of China’s economic expansion.

O&G plays, except for Gazprom (off 0.7%), mostly underperformed, as Rosneft sank 5.2%, Lukoil lost 2.3% and Surgutneftegaz gave up 3.6%.

Banking stocks moved lower along with the market, with Bank VTB dropping 2.2% and Sberbank sliding 2.3%. Heavy sell-offs hit steels, as Severstal plunged 3.7%, NLMK skidded 2.7% and MMK sagged 1.9%. Grids and Belon (up 0.7%) stood out among the few issuers that bucked the downtrend.

US indices again closed lower Tuesday, with the S&P 500 Index edging down 0.4% and financials leading the top decliners. Asian trading looks mixed today. Commodity stocks fairly stable, as oil is hovering around USD $73-75/bbl as base metal prices remained largely unchanged, trading at comfortable price levels for manufacturers.

According to our estimates, Wednesday morning's news flow is moderately unfavorable for Russian stocks. Banking blue chips could come under the heaviest pressure today. As for market drivers, US new home sales data are due out in the second half of the session. If issuers attempt to win back losses from the previous sessions, metals could see robust gain

Domestic benchmarks won back some of Friday’s losses on Monday as global markets stabilized, with the RTS Index edging up 0.2% and the MICEX Index advancing 0.4%. An upbeat open stateside lent additional support to Russian equities during the afternoon session.

O&G plays ended on a mixed note, with Gazprom rising 0.8%, Rosneft advancing 1.3%, Lukoil inching down 0.1% and Surgutneftegaz shedding 0.7%. Gaining ground after last week’s pullback, domestic banking names outperformed, as Bank VTB jumped 1.4% and Sberbank added 1.9%. Ferrous metal issuers mainly underperformed, as Severstal decreased 0.4%, NLMK dropped 2.6% and Belon gave up 2.4%. Grid stocks saw robust investor demand Monday, with FGC soaring 5.2% and MRSK Holding surging 4.5%.

US trading was moderately bullish Monday, as the S&P 500 Index ended 0.5% higher, with base metal stocks leading the market higher. Asian markets look bearish today on fears China’s economic expansion will slow down, with losses averaging 1.5-2%. Commodity markets are holding stable, with crude oil trading at around USD 73-74/bbl.

According to our estimates, Tuesday morning's news flow looks fairly unfavorable for Russian stocks and we expect all liquid names to kick off lower. As for market drivers, US consumer confidence index is due out in the second half of today’s session.

Domestic equity benchmarks closed lower Friday on external negativity, with the RTS Index plunging 2.7% and the MICEX Index tumbling 1.8%. Global investors are concerned that China’s economic expansion could face restrictions.

By the final bell, O&G plays moved down along with the market, with Rosneft declining 3.5%, Surgutneftegaz pulling back 2.4%, Lukoil losing 1.8% and Gazprom ending 1.1% in the red. Domestic banking names underperformed, with Bank VTB sinking 4.3% and Sberbank sagging 2.9%. Mixed performances were seen in the steels segment, with Severstal jumping 1.4%, MMK sliding 1% and NLMK sinking 3.2%. Amid the downturn, Rostelecom prefs saw robust demand, up 1.1%.

US exchanges also saw red ink Friday on investor concerns about the outlook for recovery of the global economy, with the S&P 500 Index shedding 2.2%. Financial and commodity issuers underperformed. Asian markets are also bearish today, with indices dropping more than 1%, a trend seldom seen. Commodity markets are stable, with crude oil trading at around USD 73-75/bbl.

According to our estimates, Monday morning's news flow looks moderately unfavorable for Russian stocks and a gradual contraction all across the board can be expected at the open. As for market drivers, US home sales data are due out in the second half of today’s session.