Fed’s rates hike to push Russian stocks higher at opening

MOSCOW, Jun 16 (PRIME) -- The Russian stock market is likely to start Thursday’s trading with slight growth as investors will price in the U.S. Federal Reserve System (Fed) rates hike, analysts said.

Andrei Vernikov, head of the department for investment analysis and education at investment company Univer Capital, said that the Fed’s move is important for Russia because it will impact the U.S. dollar’s rate, which in its turn impacts the emerging countries. The rates are important for the U.S. economy, and if it slows down, energy prices will decrease, which will hurt Russia.

“On Wednesday, the Federal Reserve System raised the rate by 75 basis points, and its chairman said that it would raise the rate by 50 basis points or by 75 basis points at the next meeting on July 26–27 … The U.S. markets grew as they received a signal that there will be no increase of 100 basis points at the next meetings,” Vernikov said.

“The situation for our market is positive on Thursday morning. The oil prices fell, but nominally. Our market will notice contraction of oil prices only after the Brent oil price dives below the support level of U.S. $114, and this is not to happen any time soon.”

Banki.ru’s senior analyst Bogdan Zvarich also said that the background for the Russian market was positive.

“The leading Asian floors gained up to 0.8%, excluding the Chinese market, which lost 0.1%. The futures for the main U.S. indices consolidate around the previous closing. The closest futures for the Brent oil blend gains 0.6% to $119.2,” Zvarich said.

Taking into account the positive background, the Russian market may start the day with purchases to push the MOEC Russia Index above 2,300 as a call for further recovery of the market, which would stimulate purchases even more, he said.

Alexei Antonov, head of Alor Broker’s investment consulting department, said that the MOEX Russia Index closed at an intra-day high on Wednesday, which usually means that demand was not fully satisfied. Chances for the market to start the day higher are high, he said.

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