Russian stocks to rise as investors wait for company reports

MOSCOW, Feb 14 (PRIME) -- Russian stocks are likely to rise at the beginning of Tuesday despite an unfavorable external background as investors hope for positive reports for October–December 2016 from local companies, analysts said.

“As I see it, the MICEX index will show an about 0.5% increase at the beginning of the day despite the negative environment. Expectations of the start of the reporting season will support the index, as investors expect positive results for October–December 2016 in the most liquid shares thanks to improvement of Russia’s macro statistics,” Timu Nigmatullin, an analyst at investment company Finam, said.

But the background for the Russian market is negative as major Asian floors are falling, futures for the S&P 500 index is close to zero after reaching record highs on U.S. President Donald Trump’s promises of a large-scale tax reform, and oil prices are under pressure as the market saw a rapid increase of oil production in some countries although OPEC and non-OPEC members fulfill their agreement, Nigmatullin said.

Nevertheless, futures for the MICEX index grew about 0.4% during the Monday evening session, Nigmatullin added.

The Brent oil price rose 0.05% to U.S. $55.62 per barrel as of 9.20 a.m. Moscow time, according to the ICE exchange.

“The April futures for the Brent oil lost 2% on Monday as hedge funds cut their net long positions in oil, while the speed of short positions growth is the highest in the last three months,” Oleg Shagov, head of investment company Solid’s research department, said.

“We expect the Russian stock market to open in a 2,160 range of the MICEX index and suppose that the stock indicator will continue the day around the current levels amid low activity of investors who are waiting for the U.S. Federal Reserve System’s Chairwoman Janet Yellen to make a half-year report to the U.S. Congress,” Shagov said.

Still, Ilya Frolov, a senior capital market analyst at Promsvyazbank, said that the MICEX index may rise above 2,160 at the opening and move close to 2,170–2,175 during the day.

“We see no serious reasons for a further downward correction taking into account a good risk appetite on global markets and noticeable demand for assets of emerging markets. Moreover, another factor of support may come from a slight upward correction of the national currency connected with a local fall of oil prices and proximity of a strong technical resistance level of 58 rubles per U.S. dollar,” Frolov said.

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