Market Roundup

Domestic exchanges were back in bullish mode Wednesday on the heels of a rise in November manufacturing figures and upbeat trends unfolding on commodity markets. As a result, the MICEX Index and the RTS Index added over 4%.

Banking stocks, which are traditionally the most sensitive to the economic environment, outperformed, with Sberbank leaping 6.2% and Bank VTB rallying 5.2%. O&G plays traded in synch with the market, as Gazprom jumped 5.1%, Lukoil climbed 3.8% and Rosneft gained a hefty 6.3%. Sustainable gains were seen in steels, Tuesday’s laggards, as NLMK surged 10.9%, MMK spiked 2.9% and Severstal ended 3.9% higher. For a second consecutive session Pharmacy Chain 36.6 topped the laggards, sliding 3.4% on reports the company is considering a major SPO.

American trading was mixed Wednesday and the market reaction to the Fed chairman’s statements about future monetary policy was neutral. The S&P 500 Index inched up a mere 0.1%, while commodity stocks outperformed. No single trend is also seen on Asian trading floors this morning, with Chinese stocks suffering the heaviest losses. Commodity markets look upbeat notwithstanding a strengthening bout of the dollar, as crude rose above USD 74/bbl and primary groups of non-ferrous metals kept climbing.

According to our estimates, Thursday morning's news flow is neutral for Russian stocks, but yesterday’s investor optimism could add to volatility. O&G plays and base metal stocks could continue to outperform on the back of rising commodity prices. Banking names will remain under pressure from financials to be released by VTB and Bank Saint Petersburg.

Domestic equity benchmarks moved higher Tuesday, fed by bullishness on commodity markets, with the RTS Index rising 1% and the MICEX Index growing 1.1%.

Transneft topped the list of gainers for the second session in a row, rallying 6.2%. Predictably, O&G names outperformed, as Gazprom added 3%, Lukoil jumped 1.5% and Rosneft grew 1.3%. Gazprom gained additional support from impressive operating showings and Exxon’s purchase of gas assets at high prices. Banking names extended gains, with Sberbank advancing 1.3% and Bank VTB adding 1.5%. In view of a seasonal contraction in the sector, steels underperformed, as NLMK slipped 2.4%, MMK dropped 0.4% and Severstal edged up 0.5%. Drugstore chain 36.6 led the losers, down a painful 8.7%, on reports the pharmacy mulls a major SPO.

Bearish trends were seen on American exchanges Tuesday, with investor sentiment marred by a jump in PPI in November. The S&P 500 Index dropped 0.6%, with financials underperforming. A deeper-than-expected decline in manufacturing numbers just smoothed a pullback. Asian trading floors are mixed this morning. Commodity markets look upbeat, although the dollar keeps firming its positions, as crude rebounded above USD 70/bbl and primary groups of non-ferrous metals ended higher.

We think Wednesday morning’s news flow is neutral for the Russian equity market. O&G plays and base metal stocks could continue to outperform. Also banking names will likely remain in vogue among investors. CPI and US construction data are due out in the second half of the session today. Tonight, after Russian exchanges close, the US Fed will announce its rate decision.

Russian equities closed on a mixed note Friday, with the RTS Index advancing 1.1% and the MICEX Index edging down 0.3%. This trend was driven by a stronger ruble. Upbeat economic data from the US had no tangible impact on the Russian market.

Oil stocks underperformed amid falling crude prices, as Lukoil dipped 0.7%, Surgutneftegaz dropped 0.6% and Rosneft declined 0.9%. Modest gains were seen in banking stocks, with Sberbank adding 0.9% and Bank VTB inching up 0.2%. As for steel makers, NLMK and MMK topped the laggards, down 2.8% and 1.5%, while Severstal remained flat.

The US market was buoyed by better-than-expected retail sales data, with the S&P 500 Index rising 0.4%, and utilities and consumer stocks outperforming. Asian trading looks mixed this morning. Commodity markets are gradually down under pressure from a strengthening dollar. WTI closed below USD 70/bbl Friday, while metals ended largely flat against the opening.

We think Monday morning’s news flow is neutral for the Russian equity market and expect domestic exchanges to kick off on a low-key note. O&G plays and banking names could outperform. Coal miners may come under pressure from some signs of deterioration in the sector’s environment.

Domestic equities kicked off in the red Thursday amid external negativity, but upbeat sentiment prevailed in the second half of the session, fed by better-than-expected employment numbers out of the US. By the final bell, the RTS Index edged up 0.23% and the MICEX Index advanced 0.17%.

In the O&G sector, Gazprom underperformed, down 0.6%. Rosneft added 1.4% and Lukoil ended flat. Financials slightly outperformed, with Sberbank rising 1% and Bank VTB adding 0.5%. Demand for steel names looked patchy, as MMK was up 1.5%, NLMK tumbled 2.8% and Severstal inched down 0.1%.

On Thursday US benchmarks advanced by an average 0.5% on better-than-expected employment data. US numbers were also greeted enthusiastically on Asian markets, which are heading north today. A spike in China’s industrial output turned into another upside driver for Asian indices. Oil prices are up slightly this morning, with Brent trading at USD 72.30/bbl.

We believe Friday morning's news flow is favorable for the Russian equity market. A rebound in oil prices will likely give a boost to O&G plays. US authorities are to release retail sales numbers at 4.30 pm Moscow time, which could impact market sentiment.

Domestic equities sank further Wednesday on the back of weaknesses on European bourses, with the RTS Index edging down 0.32% and the MICEX Index falling 0.86%.

Lukoil (down 2.2%) again underperformed among O&G plays after releasing weak financials, while Gazprom dropped 0.1% and Rosneft declined 1.4%. Quite unexpectedly, domestic banking names outperformed, with Sberbank advancing 1.4% and Bank VTB adding 0.2%. Steels moved mainly in line with market trends, as MMK fell 1.5%, NLMK edged down 1.1% and Severstal shed 0.5%.

American exchanges were again in bullish mode on Wednesday, with the Dow adding 0.5%. US stocks headed north partly as a correction after several days of losses, with commodity plays seeing gains. The bears are in control on Asian exchanges today amid weak economic data in the region and retreating oil prices. The US Energy Department’s mid-week inventory report showed a build in gasoline and distillate stockpiles, which triggered a slide in oil prices.

According to our estimates, Thursday morning's news flow is unfavorable for the Russian stock market. Falling oil will put pressure on the market, having an effect, first and foremost, on O&G plays. As for market drivers, we’d like to highlight US jobless claims and the Bank of England’s rate decision that are due out today.