Stocks to open flat on favorable environment, oil price fall

MOSCOW, Jul 24 (PRIME) -- Russian stocks are likely to open neutrally on Tuesday as the favorable external background supports local players, but contraction of oil prices undermines the market, analysts said.

“We expect the MOEX Russia Index to open with insignificant changes within 0.2–0.3% around 2,260. The levels of 2,250 and 2,240 points will act as the closest support, while 2,270 and 2,280 will remain significant resistance,” Vitaly Manzhos, a senior risk manager at investment company Nord Capital, said.

The background prior to the start of the trade is moderately positive as the U.S. stock index futures grew within 0.3%, Japan’s Nikkei225 index gained 0.5%, and Hong Kong’s Hang Seng 1.4% But contraction of oil futures creates conditions for a neutral opening of the MOEX Russia Index, Manzhos said.

“The most possible short-term scenario for the RTS Index is consolidation. The Asian stock traders show optimism connected with the Chinese central bank’s plans to stimulate internal demand…but condition of commodity markets does not look so certain,” Anton Startsev, a senior analyst at investment company Olma, said.

“Besides that, an increase the U.S. treasuries yield – the annual yield on 10-year papers rose to 2.95% on Monday from 2.89% on Friday – is also a potentially negative factor for emerging markets,” Startsev added.

Investment company Veles Capital said in a research note that investors will track the American Petroleum Institute’s report on the U.S. oil reserves, April–June operating results of retailers Lenta and O’Key and of gold producers Polyus and Highland Gold.

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