Russian stocks to slide as oil dips below $40, foreign floors fall

MOSCOW, Apr 1 (PRIME) -- The Russian stock market will open in the red zone on Friday, as investors will open shorts because oil has sunk below U.S. $40 per barrel, and the dynamics at foreign markets are negative, analysts said.

“Taking into account the negative external background, an evidently overheated at the current levels Russian stock exchange and a cheapening oil, we should expect a downward correction of the MICEX of about 0.5–1%,” Finam analyst Timur Nigmatullin said.

Brent again dipped beyond $40 on the back of the U.S. dollar weakening, which is the key negative factor for Russian stocks, Oleg Shagov, head of investment company Solid’s research department, said.

Asian markets are demonstrating mostly negative dynamics, U.S. stock market futures are decreasing, the European premarket also signals looming downward gaps at a session opening, all these factors will add to the downbeat mood in Russia, Shagov said.

Market participants are aware that if the ruble strengthens too much, the central bank will come and hamstring it by starting to replenish its reserves, Nigmatullin said.

Friday will see lots of statistics releases, the most noteworthy ones are the U.S. labor market and business activity; investors will also pay attention to speeches of U.S. Federal Reserve System (Fed) and European officials, while on the Russian corporate level, the board of directors of Bashneft, an oil company about to be privatized, will hold a meeting, Shagov said.

Financial sector led by Sberbank will be the market outsider on Friday as the most overheated sector, Nigmatullin said.

The release of U.S. Baker Hughes data on the number of drilling rigs will set the tone for the next week’s trade worldwide, Nigmatullin said.

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