Russian stocks to shrink as oil price, futures for US indices fall

MOSCOW, Aug 9 (PRIME) -- The Russian stock market is likely to shrink on Monday morning as unfavorable dynamics of futures for the U.S. indices and of oil prices on the background of the ongoing coronavirus pandemic leave the players of the national market no other choice than to sell shares at the start of the trade session, analysts said.

“The sales will continue today due to an unfavorable external background,” Alor Broker’s senior analyst Alexei Antonov said.

Futures for the U.S. indices are falling 0.2% prior to the start of trade in Russia, and the oil price is losing almost 2% falling below U.S. $70 per barrel. There are two reasons for these dynamics: the unemployment statistics that the U.S. released on August 6 exacerbated concerns that the U.S. Federal Reserve System will suspend its quantitative easing program soon, while the amount of new coronavirus cases in the U.S. and China grew, Antonov said.

“The technical picture is also bad for the MOEX Russia Index. Last year, the benchmark was trying to return to the upward trend channel that it left in the middle of July, but it failed to do so. Right now, it is a good idea to drive the market down to a level where purchases would start. It is possible that it will happen below 3,700,” he said.

Yevgeny Loktyukhov, head of the economic and sectorial analysis department at Promsvyazbank, said that the Brent oil price fell due to an unfavorable market situation and concerns about consistency of demand for energy sources while new types of the coronavirus are raging on in the U.S. and Asia. The price may even fall to $65–68 at the beginning of the week, he said.

“The contraction of up to 0.5% (of the Russian market) is possible. The external background provides no clear signals. The guidance for the MOEX Russia Index is the range of 3,780–3,820,” Georgy Vashchenko, head of Freedom Finance’s department for operations on the Russian stock market, said.

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