Russian stocks can fall on Thursday as external background worsens

MOSCOW, May 27 (PRIME) -- The Russian stock market is likely to start the Thursday trade with a slight contraction as the futures for the U.S. indices and oil prices are falling early in the day, analysts said.

“We expect the MOEX Russia Index to open with a moderate decrease of 0.1–0.4% in the range of 3,695–3,705. The levels of 3,690 and 3,670 will act as the closest support, while 3,710 and 3,720 will become the resistance again. In the first few minutes of the trade, the MOEX Russia Index will reflect a moderate worsening of the external background in the morning,” Vitaly Manzhos, senior risk manager at investment company Algo Capital, said.

The futures for the U.S. indices are decreasing by 0.1–0.3% on Thursday morning, while the Brent oil price shrank by 0.4%, and futures for the gold remain almost flat. The Chinese stock index Shanghai Composite gained 0.2%, while the Japanese index Nikkei 225 lost 0.5%, Manzhos said.

Alor Broker’s senior analyst Alexei Antonov also expects the Russian market to contract at the start of trade.

“The ruble indicator of the market is very close to a technical correction line in the form of the higher threshold of the upward movement channel. There are no drivers for the market to climb above it. Moreover, the external background has become worse this morning, as the futures for the U.S. indices are slightly in the red zone and as the oil price is losing around 0.5%," Antonov said.

"Thus, we expect a slight contraction of the MOEX Russia Index today, though the medium-term upward trend remains in force,” he said.

Veles Capital’s analyst Yelena Kozhhukhova said: “Russian assets maintain attractiveness at least in the short-term due to hopes for stabilization of the geopolitical background, (which may be spoiled by the situation with Belarus) and due to high oil prices.”

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