Russian stocks plunge as US administration mulls new sanctions

MOSCOW, Jun 1 (PRIME) -- Russian stocks plunged on Thursday as the U.S. senators suggested that U.S. President Donald Trump expand anti-Russian sanctions, analysts said.

The MICEX fell 1.62% to 1,869.66 and the RTS decreased 0.73% to 1,045.63.

“The major factor that caused sales in local assets was a piece of news regarding possible toughening of anti-Russian sanctions by the U.S., which was made by the U.S. Senate Committee on Banking. Senators offered expansion of sanctions on Russia’s metallurgic, railway and mining sectors due to its ‘hostile’ actions in Ukraine and Syria,” Sofya Kirsanova, an analyst at managing company Raiffeisen Capital, said.

The final decision is to be made by Trump, but the reaction of investors on the Russian market shows that not everyone is sure that Trump will reject the suggestion due to favorable relation toward Russia, Kirsanova said.

Irina Rogova, an analyst at Forex Club group of companies, said that there were also other negative factors. “The U.S. ADP published rather strong employment data for the private sector. This raises a possibility of the U.S. Federal Reserve System toughening its monetary policy and speaking in aggressive words at the next meeting. The contraction was also supported by the oil,” Rogova said.

During the day, oil at one time fell to U.S. $50.47 per barrel under pressure from data showing an increase in OPEC oil production by 250,000 barrels in May. This happened thanks to Libya and Nigeria, which were excluded from the oil output cut deal, and it raises concerns about a possibility of the oil market reaching a balanced state by 2018, she said.

The Brent oil price fell 0.138% to $50.69 per barrel as of 6.03 p.m. Moscow time, according to the ICE exchange.

Andrei Kochetkov, an analyst at Otkritie Broker, said that the strong ruble was not favorable for exporting companies today, and steelmaker Novolipetsk Steel (NLMK) lost 5.54%, fertilizer producer Uralkali contracted 3.58%, and metals and mining group Mechel lost 3.70%.

Kirsanova also said that shares of oil company Surgutneftegas plunged 10.34% as the FTSE index did not increase the share of securities in the index. The market expected the FTSE to recalculated the estimate of the company’s free float to 99% from 20% and to raise its share in the index, but it did not happen, she said.

Below are the MICEX’ five most active stocks on Thursday:

Company	Change, %	Last price, rbl	Trading volume, bln rbl
Sberbank	-1.88	153.00	7.814
Gazprom	-1.90	118.00	5.756
Surgutneftegas	-10.34	27.15	3.362
Lukoil	-1.93	2700.00	2.985
Rosneft	-0.03	301.45	2.896

(56.6876 rubles – U.S. $1)

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