Russian stocks may rise on favorable environment, high oil price

MOSCOW, May 25 (PRIME) -- The Russian stock market may grow on Tuesday morning as investors should price in the favorable external background and the increase of oil prices, analysts said.

“The external background favors purchases today again, as the futures for the U.S. indices are rising by 0.3% and the oil price is climbing up to U.S. $68.5 per barrel,” Alor Broker’s senior analyst Alexei Antonov said.

“We expect the market to open up with a growth, with Lukoil and Rosneft pricing in the increase in oil prices,” Antonov said.

But on Monday, the Russian market showed an unexpected weakness as it remained flat in spite of a 3% hike in oil prices and the increase of the U.S. futures. This shows that the Russian market is not ready to grow. If the national market ignores the positive background on Tuesday, then investors would have to think about closing medium-term positions and preparing for a downward correction in the summer, he said.

Vitaly Manzhos, senior risk manager at investment company Algo Capital, said: “We expect the MOEX Russia Index to open with an increase of 0.1–0.5% in the range of 3,665–3,680. The levels of 3,650 and 3,630 will once again act as the closest support, while 3,680 and 3,700 will remain as significant resistance. In the first minutes of the trade, the MOEX Russia Index will price in the moderate improvement of the external background.”

In the second half of the day, players of the Russian market will focus on dynamics of futures for the oil and on the opening of the U.S. stock market. Releases of U.S. economic statistics later in the day, including sales of new housing and the consumer confidence index, may also have an indirect impact on the national market, Manzhos said.

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