Russian stocks may open flat following Monday’s jump

MOSCOW, Jun 4 (PRIME) -- Russian stocks are likely to open flat on Tuesday as the possibility of correction following Monday’s jump will be outweighed by a favorable background, analysts said.

“Today, demand may prevail at the beginning of trade as global investors think that sales at the emerging markets are excessive, judging by dynamics of the MSCI EM stock index. At the same time, the factor of trade wars still restrains ‘demand for risk’ as it supports concerns that the growth of international stock markets is unstable,” Olma’s senior analyst Anton Startsev said.

Alexei Antonov, analyst at Alor Broker, said that the Russian market grew on Monday in spite of general international trends, as the U.S. stock market was in the red and oil prices fell.

“Today, the background for the market is positive as the U.S. stock futures are growing and oil prices are trying to make a U-turn. Our stock market is likely to open around yesterday’s closing point, but we are unable to forecast further dynamics because of our market’s isolation from the world. It will depend exclusively on the inflow of money to our market,” Antonov said.

Alor Broker thinks that the recent growth of the Russian stock market is abnormal and it does not reflect the slowdown of the national economy. The market is deeply in an overbought state, Antonov added.

But Vitaly Manzhos, senior risk manager at investment company Algo Capital, said that the external background was negative for the Russian market at the beginning of the day taking into account dynamics of oil prices and contraction in the Asian stocks.

“We expect the MOEX Russia Index to open with an about 0.2–0.3% contraction around 2,725. The levels of 2,710 and 2,700 will act as the closest support, while 2,740 and 2,750 will remain the resistance. The MOEX Russia Index is to price in a moderate worsening of the background in the first minutes of trade…At the same time, it is necessary to take into account that the national stock market has been definitely showing its independence from the external background for the past several trading days,” Manzhos said.

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