Market Roundup

Russian benchmarks ended Wednesday in negative territory, with the MICEX Index easing 0.7% and the RTS Index ticking down 0.1%. An upturn at the open reversed into a pullback as investors opted to take profit from Sberbank and O&G stocks.

O&G equities largely underperformed the market, as Lukoil dropped 1.7%, Gazprom and Rosneft eased 1%. Gazprom Neft, off 3.3%, emerged among the day’s standout losers as its 4Q 2009 financials, released on Wednesday, disappointed investors. In the banking sector, Sberbank took the sharpest dip (down 2.5%), whereas Bank VTB fared slightly better (off 0.8%). As for metals, metal stocks looked mixed, with NLMK falling 2.1%, Belon giving up 1.5%, Norilsk Nickel advancing 0.7% and Polymetal adding 2.6%.

US indices moved higher on Wednesday, with the S&P 500 Index closing 0.5% higher. Financials outperformed, while telecoms lagged behind the market. Bullish sentiment prevails in Asian trading this morning, with some benchmarks up over 1%. Among commodities, Brent futures are still hovering around USD 80/bbl, while prices of primary metal groups are mostly in decline.

According to our estimates, Thursday morning's news flow is unfavorable for Russian stocks and we do not rule out seeing liquid names heading further south at the open. As for market moving data, US initial claims are due out in the second half of today’s session.

Moderately bearish sentiment prevailed in Russian trading on Tuesday, as oil dropped on expectations of rising fuel stockpiles in the United States. By the final bell, Russian benchmarks closed in negative territory, with the MICEX Index inching down 0.1% and the RTS Index easing 0.4%.

O&G plays moved lower on sliding crude, as Lukoil gave up 2.4%, Gazprom Neft lost 2% and Rosneft skidded 1.5%. Novatek, up 3.2%, emerged as the top gainer in the oil patch on news Timchenko’s investment fund raised its stake in the gas producer. Banking plays outperformed, with Sberbank gaining 2.5%, while Bank VTB fared worse (up 1.5%). Metals ended the session on a mixed note, as NLMK climbed 3.8%, Polymetal added 1.8%, Norilsk Nickel declined 1.5% and MMK fell 1.2%. NLMK saw gains on investor expectations of generous dividend payouts.

Modest upside was seen on US exchanges on Tuesday, with the S&P 500 Index closing 0.2% higher. Telecoms outperformed, while commodity plays lagged behind the market. Asian trading is mixed this morning, with some benchmarks losing over 0.5%. As for commodity markets, Brent continues to trade around USD 80/bbl, while primary metal groups are gradually recovering.

According to our estimates, Wednesday morning's news flow looks moderately unfavorable for Russian stocks and we expect liquid names to continue their descent at the open, especially O&G plays.

On Friday domestic equities moved higher on rising oil and better-than-expected unemployment numbers stateside. Signals showing Greece partly resolved its financial problems through a successful Eurobond placement on Thursday had a positive effect on market sentiment. By the final bell, the benchmarks added over 2%, as the MICEX Index jumped 2.2% and the RTS Index gained 2.6%.

O&G plays trended in line with the market on the heels of rallying crude, as Gazprom and Tatneft climbed 2.6%, while Rosneft ended 2.1% higher. In the banking sector, Sberbank saw impressive gains (+5.1%), while Bank VTB (+1%) slightly lagged behind the market. Metals also looked primarily bullish, with Severstal leaping 4.7%, NLMK gaining 3% and Norilsk Nickel closing 1.7% higher. Coal miners emerged as Friday’s top gainers, as Belon rallied 5.8% and Raspadskaya surged 5.2% on the back of hefty investor demand on news domestic coal spot prices went up. Uralkali, off 0.5%, stood out among few decliners on rumors export duties on potash chloride could be hiked.

Russian ADRs were mostly higher on Monday, with RusHydro (up 4.2%) as one of the frontrunners, with NLMK jumping 3.6% and Rostelecom rising 3.1%.

US trading was moderately bearish on Monday, with the S&P 500 Index inching down 0.02%. Telecoms outperformed, while manufacturing and health care stocks underperformed. Asian markets are moderately bullish this morning, with some indices adding over 0.5%. As for commodity markets, Brent is hovering around USD 80 a barrel, while primary metal groups are declining slightly.

According to our estimates, Tuesday morning's news flow look favorable for Russian stocks and we expect modest gains in most liquid names at the open, specifically, in commodities. As for the market drivers, US retail sales numbers are due out in the second half of today’s session.

Domestic equity benchmarks closed in positive territory on Thursday. Upbeat macroeconomic numbers drove market sentiment, while retreating oil prices acted as a constraint, as the RTS Index advanced 0.70% and the MICEX Index edged up 0.37%.

O&G plays saw modest gains despite a drop in oil, with Gazprom rising 1.3%, Rosneft and Lukoil inching up 0.1%. Banking stocks slightly lagged behind the market, with Sberbank ending flat and Bank VTB ticking up 0.1%. Steels experienced patchy demand, with Severstal gaining 0.9%, MMK rising 0.2% and NLMK slipping 0.7%.

Bullish sentiment held sway on US markets on Thursday, as macroeconomic data came in better than expected. Specifically, investors were cheered by lower-than-expected jobless claims and higher retail sales. Upbeat sentiment spilled over from the American stock market also into Asian trading floors, which look bullish today. Crude futures rose slightly after yesterday’s decline, with Brent trading around USD 79/bbl.

In our view, Friday morning's news flow is favorable for the Russian equity market. Liquid names will most likely move higher. O&G plays look set to slightly outperform today if oil continues to go up. US unemployment numbers, due out at 4.30 pm Moscow time, could help shape market sentiment today.

Russian equities were a growth story on Wednesday, driven by positive macroeconomic numbers, as EU retail sales and the US Business Activity Index cheered investors. As a result, the RTS Index added 1.01% and the MICEX Index edged up 0.82%.

O&G plays saw moderate gains ahead of the release of the US mid-week inventory report, with Gazprom rising 0.4%, Rosneft advancing 0.8% and Lukoil inching up 0.1%. Banking names trended in line with the market, as Sberbank rose 0.6% and Bank VTB closed 0.9% higher. Steels turned in mixed performances, as Severstal gained 2.4%, MMK declined 1.9% and NLMK jumped 1.4%. MRSK Center stocks shot up 18.9% after releasing strong FY 2009 financials.

US indices closed on a mixed note on Wednesday, with the market gaining support from a better-than-expected Business Activity Index. Asian exchanges are in retreat today on worries China’s lending will slow down and a stronger yen also acted as an additional negative factor for the Japanese market. The oil market shrugged off last night’s bearish US mid-week inventory report, with oil futures rallying and Brent trading around USD 79/bbl.

We believe Thursday morning's news flow looks mostly unfavorable for the Russian stock market. A downturn on Asian trading floors and US index futures will put pressure on the market. If oil prices pare Wednesday’s gains, this will spell downside for O&G plays. Among today’s market movers, the ECB is set to unveil the next steps in its unwinding of emergency lending measures and a rate decision which could impact market sentiment. Investors also await tomorrow’s US jobs report.