Low oil prices to cripple Russian stocks at Thursday opening

MOSCOW, Jan 14 (PRIME) -- The freefall of oil prices and a negative foreign background will weigh upon Russian stocks at the opening of Thursday’s trading session, analysts said.

“The RTS index may continue falling today at the beginning of the trading session in line with the oil price,” investment company Olma senior analyst Anton Startsev said, adding that sales may even increase if the Brent oil price falls below U.S. $30 per barrel.

Asian floors show no common dynamics and although the U.S. stock index futures are rising, both Dow Jones Industrial Average and S&P 500 lost more than 2% on Wednesday.

“The S&P 500 closed below 1,900 on Wednesday and is in a short-term downward trend from the point of view of technical analysis, which is a negative factor for demand at all stock markets,” Startsev said.

Oleg Shagov, head of investment company Solid’s research department said that he expects the market to open lower, close to 1,675–1,680 of the MICEX index, and remain turbulent due to the unfavorable external background.”

He said that the current fall of oil prices has not been fully priced in by the U.S. dollar–denominated RTS index, as the RTS/Brent ratio reached its 7-year high on Wednesday and exceeded its historical average figure by more than 50%. Investors should be ready for any possible development of the situation, Shagov said.

“We expect a wave of sales in Russian shares, which will lead to a fall of main indices. The MICEX index…will move toward its local minimum of 1,660. Contraction below this level will trigger ‘stops’ in short-term long positions, and it may even speed up the negative dynamics,” Bogdan Zvarich, an analyst at investment company Finam, said.

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