Translated material
Growth with elements of risk
Oil again lifted the Russian stock market
The Russian stock market went up thanks to rising prices for “black gold”. Yesterday, WTI oil prices on the New York Mercantile Exchange rose above $80 per barrel. As a result, the RTS index surpassed 1,500 points during trading. Analysts believe that growth factors will remain the same in the medium term, but a correction is possible in the near future due to news from Western markets.By mid-day, the RTS index reached a new annual high of 1,508.42 points. The MICEX index also updated its annual maximum, reaching 1391.79 points. At the end of the day, the RTS index closed at 1,486.62 points, adding 0.94%, and the MICEX index increased by 1.35%, to 1,371.82 points.
Gazprom shares added 0.95%, LUKOIL - 1.53%, Norilsk Nickel - 1.48%, Sberbank - 0.49%. The growth of the Russian market was facilitated by oil prices, rising after the publication last week of data on an unexpected and sharp reduction in US crude oil reserves. WTI oil reached $80.23 per barrel, adding $0.77. Brent rose in price by $0.83, to $79.80.
Russian indices were also supported by the European market. In anticipation of positive statistics from the US and UK, European indices reached a 13-month high yesterday. Thus, the pan-European FTSEurofirst 300 index increased by 0.35%. The banking sector has become the driving force of the market. Shares of Standard Chartered, Barclays, Lloyds, BNP Paribas, Societe Generale, Credit Agricole and Natixis gained 0.5-2%.
However, American markets opened in the red due to negative statistics on the real estate market. In October, the pace of housing construction unexpectedly fell: the number of new buildings amounted to 0.529 million, against the forecast of 0.6 million and the previous value of 0.59 million. Inflation in October amounted to 0.3%, although analysts expected that it would not exceed 0.2%. At the beginning of the trading session, the Dow Jones index lost 0.45%, the S&P 500 - 0.35%, NASDAQ - 0.75%.
At the same time, Bank of America shares showed good results, rising in price by more than 2%. Shortly before the opening of the session, it became known that analysts at the hedge fund Paulson & Co predicted an almost doubling of the bank's shares in the next couple of years. The securities of Hewlett-Packard, Cisco Systems and Walt Disney were trading noticeably worse than the market, whose capitalization in the first minutes of trading decreased by 0.6-1%.
“It’s disappointing that the market is losing medium-term support in the form of good statistics on the US real estate sector,” notes Alexander Chabanov, an analyst at Brokercreditservice. -- There are concerns that the upward correction of this sector has ended. But the main reference point for the financial world now is the dollar, which is in a steadily falling trend, supporting global stock and commodity markets. The latter are pushing up the Russian market. But the MICEX index can still adjust to 1340-1350 points.”
“The growth of American stocks in November is accompanied by declining trading volumes,” notes Alexander Ivanishchev, head of the analytical department of Infin. -- This is clearly visible in the S&P 500 index, where average daily turnover has fallen by almost a third this month. On Tuesday, turnover on the index was the lowest in the last three months, although the index closed at a yearly high. Previously, there was an alarming trend of reduction in the net volume of trading positions in the S&P 500, which indicates that investors are withdrawing their funds.” According to the analyst, this trend is now typical for other stock markets. “In particular, the turnover on the MICEX index in a falling market on Tuesday was higher than on Monday in a growing one. The most mobile speculators trading on a weekly horizon took profits. The technical rebound that began at the beginning of the month has already outgrown itself. For the second Monday in a row, the same picture is repeated - strong growth at medium speeds. Buying on such a market is associated with great risk,” says Mr. Ivanishchev.