Russian stocks to fall as coronavirus, oil woes spread

MOSCOW, Mar 12 (PRIME) – The Russian stocks are likely to contract on Thursday morning in line with the other global bourses and oil prices as investors are still fleeing from risky assets following expansion of the coronavirus, analysts said.

“Today, a downward correction of the RTS index is likely to deepen at the beginning of trade due to the pressure of the external background. Neither an unexpected cut of the interest rate by the Bank of England to 0.25% from 0.75%, nor the measures to support the economy announced by the U.S. president looked like a good reason for traders to stop the flight from risks,” investment company Olma’s senior analyst Anton Startsev said.

The only thing in which the market became certain after the U.S. President Donald Trump’s comment is that the government is gravely concerned with the coronavirus, which was confirmed by restrictions on inbound passenger traffic to the U.S. from Europe, Startsev said.

Startsev also said that the oil prices falling on reports that Iraq and Kuwait reduced prices for the crude with April delivery, add no positive momentum to the Russian stock market.

“The markets were weak (on Wednesday), that’s why the danger of a deeper downward movement is still present. Under the negative scenarios, the targets for the benchmarks (MOEX Russia Index and the RTS Index) may stand at 2,200 and 870, respectively,” Yelena Kozhukhova, analyst at Veles Capital, said.

To switch to growth, the stock markets will have to wait for the peak of the coronavirus epidemic to pass, which is not going to happen very soon, Kozhukhova said.

“The World Health Organization acknowledged the current situation with the coronavirus as pandemic, creating conditions for the companies to cease fulfilling liabilities on deliveries or procurements of goods due to the force majeure. That is why we will open with an about 5% contraction of the MOEX Russia Index today,” Alor Broker’s analyst Alexei Antonov said.

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