Russian stocks fall as investors fear US–China spat escalation

MOSCOW, May 29 (PRIME) – The Russian stocks contracted on Friday together with the major foreign exchanges and commodity bourses on investor fears of a new escalation of the U.S.–China conflict, analysts said.

The MOEX Russia Index fell 1.62% to 2,734.83 and the RTS decreased 1.77% to 1,219.76.

“U.S. President Donald Trump is to hold a news conference in the second half of the day where he may announce measures against China in the wake of restrictions of freedom in Hong Kong. It is obvious that the Chinese side may retaliate, and the confrontational spiral will get a new twist,” Andrei Kochetkov, senior analyst at Otkritie Broker, said.

If the situation develops under a negative scenario, the first phase of the trade agreement may suffer, especially since it became impossible to comply with the agreements due to the COVID-19, Kochetkov said.

Valery Yemelyanov, analyst at investment company Freedom Finance, said that worsening of the U.S.–China conflict resulted in a worldwide contraction of stock indices, while the oil price also added fuel to the fire.

“The news about a record contraction of production in the Persian Gulf for the past 10 years provided psychological support to oil. OPEC reduced the amount to 24.77 million barrels in May, which is lower than April peaks by more than 6 million barrels. It helped oil to grow above U.S. $36 at first, but the impact of the reports was not strong enough to overweight contraction of demand in the U.S. and tensions around Hong Kong’s autonomy,” Yemelyanov said.

The Brent oil price decreased 0.963% to $34.95 per barrel as of 6.14 p.m. according to the ICE exchange.

Kochetkov also said that shares of metals companies were under the pressure as metals are prime candidates for a slowdown of demand following the U.S.–China spat. Steelmaker Novolipetsk Steel (NLMK) lost 0.75% to 137.76 rubles, while Magnitogorsk Iron and Steel Works (MMK) shrank by 3.31% to 40.44 rubles.

Power holding Inter RAO lost 3.32% to 4.944 rubles due to a dividend cut-off, Kochetkov said.

Below are the MOEX Russia Index’ five most active stocks on Friday:

Company	Change, %	Last price, rbl	Trading volume, bln rbl
Gazprom	+1.57	199.95	34.224
Sberbank	-2.20	200.50	21.465
Lukoil	-2.77	5242.50	12.919
Tatneft	-5.84	532.00	11.498
Polyus	+2.94	11673.00	7.605

(71.1012 rubles – U.S. $1)

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