Russian stocks to fall on Fed’s key rate increase, oil price fall

MOSCOW, Dec 15 (PRIME) -- Russian stocks are likely to fall at Thursday opening as the market will price in Wednesday's contraction of oil prices, analysts said.

“We expect the market to open with a significant decrease of about 0.7% close to 2,215 of the MICEX index. The levels of 2,200 and 2,190 will become the support, while levels of 2,230 and 2,240 will act as resistance,” Vitaly Manzhos, a senior analyst at Bank Obrazovanie, said.

In the first half of the day, the market will react a fall in the oil price that occurred on Wednesday evening after the Fed increased the target rate, Manzhos said.

According to the ICE exchange, the Brent oil price fell to U.S. $53.90 per barrel on Wednesday from $55.72 per barrel on Tuesday.

Ilya Frolov, a senior analyst at Promsvyazbank’s research department, said that the fall of oil prices and a downward correction of global markets create a negative environment for Russian stocks. Taking into account a severe overbuying of the last few days, now may be the time for a correction, he said.

“Though we do not expect that the Fed’s decision to have a long-term effect on dynamics of ruble assets, which are supported by an inflow of capital from non-residents, the factor of the upcoming year end may take its toll and lead to prolongation of non-aggressive profit taking and a lower leverage,” Frolov said.

Timur Nigmatullin, an analyst at investment company Finam, said that background prior to the start of the local trade session is mixed as futures for the U.S. S&P 500 index is rising, but Asian floors show no common dynamics.

“Taking into account the results of the Fed’s meeting and the impact from the mixed background, we expect a moderate contraction of the MICEX index of up to 0.5% in the first half of the day,” Nigmatullin said.

Manzhos also said that local investors will keep track of the oil prices during the day, and the release of the U.S. weekly statistics on jobless claims later in the day may also affect the trade.

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