Stocks to open flat in thin trade ahead of monetary policy meetings

MOSCOW, Jun 7 (PRIME) -- Russian stocks are likely to open close to flat on Wednesday as activity of all markets is winding down prior to monetary policy meetings of the European Central Bank (ECB) and the U.S. Federal Reserve System (Fed), analysts said.

“From the point of view of technical analysis, consolidation of the RTS index may continue in the short term. The external background gives no drivers for any strong movements, and the general activity of markets is falling prior to the Thursday’s meeting of the ECB and to the June 14 meeting of the Fed,” Anton Startsev, a leading analyst at investment company Olma, said.

Oleg Shagov, head of investment company Solid’s research department, said that the ultimate influence of the key factors that have a significant impact on behavior of Russian stocks is close to neutral at the beginning of Wednesday. The Brent oil price is fluctuating around a U.S. $50 per barrel mark, the U.S. stock index futures are changing insignificantly, and the Asian floors are showing moderately positive dynamics.

“We expect the Russian stock market to open in a 1,870–1,875 range of the MICEX index and suppose that the stock indicator will continue the day around the level under the influence of changes in the external background and current events,” Shagov said.

Shagov also said that the U.S. stock volatility index VIX, or a so-called barometer of investor fears, has grown for a second day in a row as on Thursday former FBI Director James Comey is to testify to the Congress on the Russian case, the U.K. is to hold parliamentary elections, and the ECB is to decide on monetary policy, he said.

But Bogdan Zvarich, an analyst at investment company Finam, said that Brent, which has stabilized around a $50 per barrel level, will support the local market at the beginning of the day. Startsev added that investors will track the Eurozone’s gross domestic product data and a weekly report of the U.S. Department of Energy on oil reserves, which will be released later in the day.

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