| The Russian stock market is “tired” after the May holidays After the holidays, European stock exchanges, including Russian ones, opened with a sharp drop in indices and quotes. The Dow Jones fell 1.3% on Monday and fell below 10,000 points for the first time since December last year. The aggregate indices of European exchanges also decreased: Zurich - by 3.19%, Frankfurt - by 2.85%, Paris - by 2.73%, Amsterdam - by 2.52%, London - by 2.29 %. On May 10, ADRs for shares of Russian companies also fell sharply in price: their quotes at the end of trading in the United States were 1.5-12.7% lower than the prices for the corresponding securities at the close of the RTS on Friday. The downward trend in global stock markets was caused by a reassessment of the likelihood of an increase in US lending rates after the publication of unexpectedly good data on the US labor market on Friday. In addition to the stock news itself, bearish sentiment was fueled by expectations of a fall in commodity markets. According to The Wall Street Journal, China is considering raising the Central Bank lending rate by 0.5% for the first time since 1995 to avoid economic overheating. At the end of April, Beijing already limited lending to the industry, which led to a fall in world prices for metals and a decrease in the value of shares of metallurgical companies, in particular the shares of Norilsk Nickel. In addition, on Monday, after the Saudi Arabian Oil Minister announced the need to increase oil production, the price of oil decreased, which also led to a fall in markets.
The opening of trading on Russian stock exchanges yesterday was accompanied by a significant decrease in quotes: from 1.5% on the RTS for the already significantly cheaper shares of YUKOS to 8.2% for the securities of RAO UES of Russia. The minimum value of the RTS index yesterday was 573.65 points, which is 4.57% less than its Friday value. The MICEX index fell during trading to 504 points (or 7.65% compared to the last closing level). However, despite the significant decline in stock indices, trading volumes on Russian exchanges did not exceed the average values, which means that panic selling was not observed. By mid-day the situation had stabilized and stock quotes had increased slightly. Obviously, the reason for this was the news received from the Asian and European markets. For example, stock exchanges in the Pacific region did not support the American downward trend and showed moderate growth. And in the European markets, interest in the shares of European companies that fell in price on Monday increased, as a result of which an increase in stock indicators was recorded on all EU exchanges.
The correction that began in the middle of the day on the Russian stock market still did not lead to a significant increase in the total value of Russian shares: the RTS index at the end of trading fell by 4.08%, and the MICEX index by 4.12%. In the coming days it will become clear whether the Russian market has reached significant resistance levels or whether the decline will continue. In any case, the potential for negative news received during the May holidays has clearly been exhausted. After all, the expectation of an increase in lending rates is no longer capable of triggering a fall in markets. And the release of good data on US economic indicators led to an increase in futures for North American stock indicators. Oil prices, even taking into account the latest decline, continue to remain very high. The emerging trend towards an outflow of investment from emerging markets may well be compensated for by Russian money. True, such support can only be provided in conditions of growing ruble liquidity, and it has been low lately: market participants are buying the dollar. If the global trend towards its growth in relation to major currencies, which has intensified in anticipation of an increase in rates, manifests itself in Russia, then the wait for better times for the domestic stock market may last a long time. Igor POLISCHUK |
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