Russian stocks fall on expectations of US rolling back soft policy

MOSCOW, Feb 26 (PRIME) – The Russian stocks contracted on Friday together with all major foreign bourses as the investors expect higher inflation and an end to a soft U.S. monetary policy, analysts said.

The MOEX Russia Index fell 1.85% to 3,346.64 and the RTS decreased by 2.65% to 1,411.93.

“The external background for the Russian market was negative today. The U.S. indices gained 0.8% ahead of start of trade, but it was obviously not enough to compensate the sharp fall of late Thursday. The European floors lost around 1% on average, and sales in Asia led to contraction of up to 4%,” Freedom Finance analyst Valery Yemelyanov said.

“The reason behind it all was a jump of the U.S. treasuries’ yield triggered by good labor market statistics. Investors are preparing for a jumpstart of inflation and folding of the soft U.S. monetary policy.”

Andrei Kochetkov, senior analyst for global research at Otkritie Broker, also said that the growth of U.S. treasuries’ yield was the main cause for sales in the world.

“In fact, all funding currencies found themselves in a state of a real rate growth. On Thursday, the yield on 10-year U.S. treasuries reached 1.614%. In other words, the yield became equal to the stock market yield. If the trend persists, conservative capital will withdraw actively from risky assets into securities with guaranteed incomes. However, it may be a harbinger of an even worse situation,” Kochetkov said.

He also said that only efforts of the European Central Bank and creation of a stabilization fund outweighed concerns over solvency of peripheral European countries 10 years ago. The leading regulators are yet to make statements on their quantitative easing programs, but investors already say that they need higher premiums for risk, he said.

Yemelyanov also said that the Russian ferrous metals companies were among the gain leaders as sources of high dividends at times when ruble inflation is above the key rate and the yield on conservative shares. Novolipetsk Steel (NLMK) gained 3.04% to 223.88 rubles and Magnitogorsk Iron and Steel Works (MMK) rose by 2.23% to 54.275 rubles.

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

Company	Change, %	Last price, rbl	Trading volume, bln rbl
TCS Group GDRs	-0.82	3868.00	26.584
Norilsk Nickel	+0.63	23350.00	23.732
Sberbank	-0.25	270.03	18.875
Gazprom	-1.26	218.90	12.821
Lukoil	-2.39	5603.50	12.731

(73.4747 rubles – U.S. $1)

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