Russian stocks to open down on falling oil, Fed minutes

MOSCOW, May 19 (PRIME) – The Russian stock market is likely to decrease at the Thursday opening due to a fall of the oil price and as U.S. Federal Reserve System (Fed) minutes released late Wednesday signaled an increase in chances of the U.S. key rate rise in June, analysts said.

“A widening of a downward correction of the RTS index and a significant increase of the U.S. dollar–ruble pair are possible today. The minutes of the Fed April meeting showed that the increase of the key rate in June is a possible scenario if the economic resilience is proved by the current data,” Anton Startsev, senior analyst at investment company Olma, said.

The revision of expectations regarding the dynamics of interest rates has a negative impact on investors’ appetite for risk and their demand at the commodities and stock markets, Startsev said.

General background prior to the opening of the trading session is moderately negative. The Brent oil price fell 1.853% to U.S. $48.04 per barrel as of 9:09 a.m. Moscow time, according to the Ice exchange. U.S. stock index futures are falling, main Asian floors are in the red zone, and the premarket of the European trade session also indicates a slide of European stocks today, Oleg Shagov, head of investment company Solid’s analytical department, said.

“We expect the Russian stock market to open with a decrease to about 1,910 points of the MICEX index, and suppose that the pressure of sales may increase at the Russian stock market due to a negative external background,” Shagov said.

The MICEX index may lose about 0.5% at the opening, while the RTS index may plunge about 1.5%, Vasily Oleinik, an expert at investment company ITinvest, said.

“Uncertainty still reigns on global markets, and investors are nervous and tend to keep a low profile. Besides yesterday’s Fed minutes, stock markets have been shocked this week by statements of the Federal Reserve Bank of Atlanta’s President Dennis Lockhart and the Federal Reserve Bank of San Francisco’s President John Williams, who reinstated the importance of the Fed’s June meeting and a possibility of the key rate increase then,” Oleinik said.

During the day, gas giant Gazprom’s board of directors is to announce its recommendation on dividends and mobile operator MTS is to publish its financial report. This may have an influence on the market, Shagov said.

Investors will also track data on retain sales in the U.K. and minutes of the latest meeting of the European Central Bank. The U.S. statistics may also be of interest, including the Chicago Fed National Activity Index, Oleinik said.

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