Russian stocks seen falling on US key rate, COVID-19 worries

MOSCOW, Jul 12 (PRIME) -- The Russian stock market can open lower on Tuesday following a decrease on the foreign bourses that fear a fast U.S. key rate rise and new COVID-19 quarantines, analysts said.

"Speaking about the global market mood on Tuesday morning, we can characterize it as negative. The leading Asian markets decrease by up to 1.9%. Futures for the key American indices lose up to 0.6%. The nearest Brent futures fell by 1.7% to U.S. $105.3 per barrel," senior analyst at financial supermarket Banki.Ru Bogdan Zvarich said.

Investors are worried that high U.S. inflation will force the Federal Reserve System (Fed) to raise the key rate more actively at the coming meetings, which might raise the risks of recession and of a poorer performance of local companies, most of all, those with a high debt burden, Zvarich said.

A new outbreak of the coronavirus is an additional factor of concern. Possible new quarantines can undermine global economic growth, the analyst said.

Georgy Vashchenko, head of investment company Freedom Finance’s department for trade operations on the Russian stock market, says that negative dynamics of the Russian market can also be explained by dividend cut-offs of large companies.

He said that the downward correction might be short-term, and the losses may be erased after some local companies release their operating and financial reports for April–June.

End