Russian stocks to rise after Fed maintains rates, buybacks

MOSCOW, Apr 29 (PRIME) -- The Russian stock market is likely to start Thursday with a slight increase as Wednesday’s decision of the U.S. Federal Reserve System (Fed) to maintain its rates and buybacks of state and mortgage securities pushed the U.S. dollar down and the oil prices up, analysts said.

“”The Fed’s meeting was the key event of the day. The regulator made an expected decision to maintain the rate, and kept the buyback volume of state and mortgage securities. … This resulted in a fall of the U.S. dollar and an increase of the price of commodities. The U.S. market did not react to that yesterday, which is worrying, but the futures for the U.S. indices grow today by half a percentage point,” Alor Broker senior analyst Alexei Antonov said.

“We expect modest growth at the opening. The shares of oil companies should outperform the market as the oil price is near U.S. $67 per barrel. The oil price may try to go to $70 per barrel, but the fair price next month should range between $64 and 66.”

Vitaly Manzhos, senior risk manager at investment company Algo Capital, said that the positive external background and growth of the futures for the MOEX Russia Index and the RTS Index on Thursday morning favor an increase at the beginning of trade.

“We expect the MOEX Russia Index to open with an increase of 0.2–0.6% in the range of 3,585–3,600. The levels of 3,570 and 3,550 will act as the closest support, while 3,620 and 3,630 will become the resistance. The MOEX Russia Index will price in the obvious improvement of the external background, and later in the day it may continue correctional growth to the range of 3,600–3,620,” Manzhos said.

Bogdan Zvarich, senior analyst at Promsvyazbank, said that the oil price growth and investor risk appetite favor ruble growth.

Georgy Vashchenko, head of Freedom Finance’s department for trade operations on the Russian stock market, said that the company expected mixed opening of the market as the foreign trade floors switched into consolidation.

“The securities of banks and the oil and gas sector will become the growth leaders of the Moscow Exchange. … Corporate reports and Gazprom’s investor day will be in focus of the local market,” Vashchenko said.

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