Russian stocks may fall as EU coordinates 6th round of sanctions

MOSCOW, May 31 (PRIME) -- The Russian stock market may start Tuesday’s main trading session with a decrease as investors will react to the sixth round of sanctions that the E.U. has coordinated, which includes a partial ban on imports of Russian oil, analysts said.

“We can say that the external background is mixed. On the one hand, the oil price is rising, and China is getting ready to soften the quarantine measures. On the other hand, Europe has coordinated a partial embargo on the Russian oil, which encompasses the loss of some sales channels for Russian oil companies. As a result, a short-term reaction of the Russian market could be negative due to the weakness of the oil and gas shares,” Andrei Kochetkov, leading analyst at Otkritie Investment, said.

The Russian market was unable to grow on Monday because of the strengthening ruble and a series of news on cancellations of dividends. Even positive dividend stories only allowed the MOEX Russia Index to avoid a deeper fall, Kochetkov said.

Algo Capital senior risk manager Vitaly Manzhos said that the external background for the Russian market was positive in the morning as the futures for the U.S. indices gained 0.1–0.6%, the Brent oil price rose by 1.4%, and the Chinese index Shanghai Composite grew by 0.8%.

“The external background could be characterized as positive. It creates conditions for a slight growth of the MOEX Russia Index at opening. Nevertheless, the positive factor could be completely negated by the news on coordination of another round of the anti-Russian sanctions by the E.U.,” Manzhos said.

“We expect the main trading session in Russia to start with a significant change of up to 2% of the MOEX Russia Index in the range of 2,350–2,450. The levels of 2,340 and 2,320 will act as the closest support, while 2,470 and 2,500 will become the resistance,” he said.

But Bogdan Zvarich, senior analyst at financial supermarket Banki.ru, said that the Russian market may open higher as it would continue the positive momentum, which allowed the bourse to win back some ground in the second half of Monday’s trade, while the positive mood of players on the major foreign bourses supports the buyers.

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