Stocks to ease in early trade pricing in Wednesday oil price fall

MOSCOW, Aug 3 (PRIME) -- The Russian stock market is likely to start the Thursday session with a slight decrease because investors will continue pricing in Wednesday’s slump of oil prices at a time when only the ruble’s depreciation supports the MOEX Russia Index, analysts said.

Bogdan Zvarich, senior analyst at financial platform Banki.ru, said that contraction of oil prices may trigger sales in the Russian shares at the beginning of the trading session.

“As a result, the MOEX Russia Index may fall below 3,100, but if it holds above the support of 3,075, it will demonstrate the possibility of index growing further and hitting resistance of 3,200,” Zvarich said.

The background is moderately negative for the Russian market with the leading Asian bourses losing up to 1.7% except the Chinese market that gained 0.6%. The futures for the main U.S. induces consolidated around the Wednesday levels, and the oil price gained only 0.1% after losing more than 2% on Wednesday, he said.

“The MOEX Russia Index grew technically by 0.4% on Wednesday, but many blue chips fell, including the ferrous metals that contracted in spite of the serious depreciation of the ruble. It points to the fact that the upward momentum has fizzled out on the Russian market, whose increase over the past several days was supported to a large extent only by the devaluation process,” Alexei Antonov, head of Alor Broker’s investment consulting department, said.

Trade on the Russian market will depend on the U.S. market mood to a certain extent. The U.S. indices and the prices for commodities went down on Wednesday following a downgrade of the U.S. credit rating, but it changed nothing in the U.S. economy, and the market may forget the news soon. In this case, the oil price becomes important for the ruble assets again, Antonov said.

But BitRiver’s financial analyst Vladislav Antonov said that the MOEX Russia Index may still grow because of the weak ruble.

“The MOEX Russia Index continues its rally because it receives help from the ruble’s depreciation and expectations of Sberbank’s financial report calculated under IFRS (International Financial Reporting Standards) that the bank is to publish today. The forecast for the trading session today is 3,080–3,120,” BitRiver’s Antonov said.

The ruble ignored any support levels and showed the lowest annual figures against the U.S. dollar on Wednesday. The oil price is in a technical downward correction after serious growth, but the fundamental situation on the oil market supports the bulls. Still, the main negative factor for the ruble is a colossal difference between supply and demand of foreign currency on the national market, Antonov said.

Importers recovered parameters of the deals, but they lack the U.S. dollars and euros. The outflow of capital from Russia is growing, and it creates a vacuum of supply while demand is consistency rising. The ruble’s loss of 10 % against the U.S. dollar could speed up inflation to 10–12%, and inflationary risks are growing, he said.

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