Russian stocks expected to fall at opening on global economy woes

MOSCOW, Mar 28 (PRIME) -- Russian stocks are likely to shrink at opening on Thursday as concerns over condition of the international economy undermine investor willingness to take risks, analysts said.

“We expect the MOEX Russia Index to open with a moderate decrease within 0.2–0.4% around 2,480. The levels of 2,470 and 2,460 will act as the closest support, while the levels of 2,500 and 2,510 will become the resistance,” Vitaly Manzhos, senior risk manager at investment company Algo Capital, said.

The background for the Russian stock market is negative as the U.S. stock index futures fell by 0.3%, the Brent oil price lost 0.3%, Japan’s Nikkei225 contracted by 1.5%, and Hong Kong’s Hang Seng fell by 0.1%, Manzhos said.

Mikhail Poddubsky, chief analyst at Promsvyazbank, said that risk appetite remains relatively low among global players. One of the key topics at international markets is the debt market. Yield on U.S. 10-year treasuries fell to 2.35%, the lowest point since December 2017, and Germany placed its 10-year bonds with a negative yield of 0.05%, for the first time since 2016.

“The noticeable rate decrease on the debt markets reflects apprehension about a rapid slowdown of the economy in the coming quarters, which creates a not so favorable background for the stock markets…It is problematic to expect consolidated growth of the Russian market without any improvements in the background,” Poddubsky said.

Investment company Olma’s senior analyst Anton Startsev also said that a downward correction may strengthen for the RTS Index early in the day to push it down to 1,200 at the start of the day.

“The background is characterized by a decrease of investor readiness to take risks, which is partially due to the pessimistic estimates of the global economy’s condition, and partially due to a high uncertainty in the U.K., as the British parliament yesterday rejected every suggested option for leaving the E.U.,” Startsev said.

Manzhos also said that investors will track a large amount of statistics releases during the day, including the U.S. estimate of the country’s gross domestic product (GDP) in October–December 2018 and weekly statistics on jobless claims.

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