Russian stocks may fall on concerns over Fed key rate increase

MOSCOW, Sep 20 (PRIME) -- Russian stocks are likely to fall at Tuesday opening as the possibility of the U.S. Federal Reserve System (Fed) raising its key rate has increased after two banks that are Fed’s primary dealers said they expect an increase at the Fed’s current meeting, analysts said.

“A downward correction of the RTS index is possible today at the beginning of trade. The external background slightly worsened after news that two banks that are Fed’s primary dealers expect the authority to raise its key interest rate at the current meeting, results of which will be announced on Wednesday evening,” Anton Startsev, a senior analyst at investment company Olma, said.

The uncertainty regarding the Fed’s monetary policy restrains activity of investors and prevent the stock market from leaving the consolidation phase, Startsev said.

“We expect the Russian stock market to open within the range of 1,980–1,085 points of the MICEX index and suppose that the stock indicator may resume a fall if the external background provides negative signals,” Oleg Shagov, senior analyst at Bank Obrazovanie, said.

Dynamics of the Russian stock market will also depend on the oil price, Shagov said. The Brent oil price fell 0.328% to U.S. $45.80 per barrel as of 9.13 a.m. Moscow time, according to the ICE exchange.

The background prior to the opening of the Russian stock market is moderately negative, taking into account the oil price fall and dynamics of Asian floors, which are in the red zone, Timur Nigmatullin, an analyst at investment company Finam, said.

“Taking into account the moderately negative external background and upcoming press releases on key rates of central banks of the world’s largest economies, I expect that the MICEX index will fall within 0.5% in the first half of the day,” he said.

Wednesday statistics published by the Federal State Statistics Service will also undermine the market, Nigmatullin said. According to the service, Russians’ real disposable income decreased 8.3% on the year in August and retail sales decreased 5.1% on the year to 2.436 trillion rubles in the month.

(64.9173 rubles – U.S. $1)

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