Stocks to fall on possible US sanctions after Navalny’s illness

MOSCOW, Aug 26 (PRIME) -- The Russian stock market will likely edge down at opening on Wednesday as the market fears new U.S. sanctions, if there is proof that opposition leader Alexei Navalny was poisoned, analysts said.

“Politics came out on top. Deputy U.S. State Secretary Stephen Biegun said that if the poisoning version about Alexei Navalny is confirmed, the U.S. will take very tough measures against Russia, Alor Broker senior analyst Alexei Antonov said.

 “There is a feeling that forign investors started to quit Russian securities preventing the market from reacting to foreign good news. Strong sales were seen yesterday in Norilsk Nickel and Sberbank, non-residents’ favorite papers.”

Investment company Olma’s senior analyst Anton Startsev said that demand on the Russian stock market may be under pressure from the external background at the start of trade. The yield on 10-year U.S. Treasuries exceeded 0.7% meaning lower comparative attractiveness of investment in the developing markets for the global investors.

The U.S. stock market closed predominantly in the green zone on Tuesday thanks to good news from the negotiations between China and the U.S., and expectations that the Federal Reserve System will stick to a mild monetary policy as economy recovers,  Finam analyst Sergei Drozdov said.

Brent rose 2.04% to U.S. $46.06 on Tuesday. According to Drozdov, the growth was caused by an 80% reduction in oil output in the Mexican Gulf as the Laura hurricane gained power. The American Petroleum Institute reported a decrease of crude reserves by 4.5 million barrels.

Brent continued to rise on Wednesday, adding 0.28% to $45.99 as of 9:17 a.m., Moscow time.

Drozdov put the MOEX Russia Index support level at 3,020 and 2,995, the resistance at 3,050 and 3,073. The local support of the RTS index were placed at 1,260 and 1,250, resistance at 1,290.  

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