Russian stocks to fall on oil price, geopolitical tensions

MOSCOW, Jan 20 (PRIME) -- Russian stocks are likely to fall at opening on Tuesday due to lower oil prices and rising geopolitical tensions after truce violations in Ukraine, analysts said.

“The Russian stock market will open lower today. U.S. stock indices, which were closed on Monday, and falling oil prices will provide a downward gap of 0.5% at the opening,” Denis Khripushin, analyst at 2trade.ru, said.

The Brent oil price slid 2.807% to U.S. $48.8 per barrel as of 8.52 a.m. Moscow time, according to the ICE exchange.

“Hopes of some investors for a partial lifting of the Western sanctions were buried by a worsening of the situation in Ukraine – one of the sides there unilaterally broke the truce regime. Let’s hope there will be no new sanctions,” Andrei Vernikov, Zerich Capital’s deputy CEO, said.

On Monday, Kiev launched a mass operation to reclaim lost ground, after which pro-Russian separatists renewed attacks on Ukrainian forces at an airport complex.

Promsvyazbank’s analysts Ilya Frolov and Yevgeny Loktyukhov also said that despite a positive external news flow, with Asian and European bourses rising, significant risks for Russia, including the situation in Ukraine’s south-east and the possibility of losing an investment rating, will hold down purchases.

“There are no drivers for strong movements. Uncertainty in oil prices and the risk of Russia losing an investment rating are still a restraining factor for buyers,” Olma’s senior analyst Anton Startsev said.

International rating agencies Moody’s and Fitch have already reduced Russia’s ratings to Baa3 and BBB- respectively, one notch above the junk level, and Standard & Poor’s said it will announce its decision until the end of the month.

Investors will also closely watch today for the release of Germany’s economic sentiment index, U.S. retail sales data and the annual red book index.

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