Russian stocks to fall as oil price undermine shares of oil cos

MOSCOW, Jun 10 (PRIME) -- The Russian stock market is likely to start the day lower as the morning contraction of oil prices will result in the sales in shares of oil and gas companies, analysts said.

“Yesterday the heavyweight oil and gas securities propelled Russian shares up thanks to a new increase of oil prices. This morning the oil prices lose around 0.8%, and the commercial and precious metals trade lower. The futures for the U.S. indices are almost flat, that is why we expect the Russian market to open with a slight contraction,” Alor Broker senior analyst Alexei Antonov said.

Investors will focus on the U.S. inflation statistics, which is unlikely to make investors happy, and the initial reaction may be severely negative. However, the upcoming meeting of the U.S. Federal Reserve System next week is more important, and may form a new trend. Other than that, there is no reason for sales from mid-term portfolios meaning the Russian market maintains an upward trend, Antonov said.

Vitaly Manzhos, senior risk manager at investment company Algo Capital, said that the background for the Russian market was mixed with the Asian markets growing, the futures for the U.S. indices showing mixed dynamics, and oil prices falling. But the noticeable contraction of oil prices creates conditions for the MOEX Russia Index to start the day with a fall, he said.

“We expect the MOEX Russia Index to open with a moderate decrease of 0.2–0.6% in the range of 3,820–3,385. The level of 3,810 and 3,800 will once again act as the closest support, while 3,840 and 3,860 will become the resistance. In the first few minutes of the trade, the index will price in the noticeable morning fall of futures for the oil. After that, it will likely stabilize around the opening point,” Manzhos said.

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