Russian stocks to dive on Moody’s downgrade, Ukraine’s crisis

MOSCOW, Jan 19 (PRIME) -- The Russian stock market will decline on Monday as investors are disappointed by state bonds’ rating downgrade to a pre-junk level by Moody’s and they fear that the Ukrainian crisis will soon see another peak, analysts said.

“A certain downward correction is possible in the start of the trading session today. International rating agency Moody’s announced a reduction of Russia’s sovereign credit rating to Baa3 from Baa2 last weekend, now the rating is one step away from the junk level in opinions of all three agencies,” Olma’s senior analyst Anton Startsev said.

Brent went down 0.74% to U.S. $49.80 at 9.20 a.m., Moscow time on Monday, which is a strong negative factor for Russian stocks, Platon Maguta, senior manager at Fond Maguta managing company, said.

The market situation will be spoiled by the escalating crisis in the easternmost zones of Ukraine. “Guerillas in the Donetsk republic claim to have participated in many armed clashes in the east of the country, while the Kremlin says that Kiev has rejected another proposal to deescalate the conflict,” Andrei Dirgin, analyst at Alfa-Forex, said.

Chinese stock floors’ volatility will add to the uncertainty of Russian investors, Startsev said.

The U.S. bourses will be closed for the Martin Luther King Day holidays.

At the start of trading, Russian players will pay attention to the Japanese statistics, Finam analysts said. In Japan, consumer sentiment rose to 38.8 in December from 37.7 in November, while the November’s industrial output fell 0.5% under the final estimate.

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