April 22, 2013, 13:42 / Finance

Oil does not allow the market to decide

Daily review of events on the Russian market Grigory Birg

The Russian stock market, on Monday, April 22, began the trading session of the new week with an increase in the main indicators due to the optimistic mood that reigned on world markets. Thus, in the first minutes of trading, the MICEX index increased by 0.73% to 1348.14 points, the RTS index increased by 0.50% and amounted to 1343.15 points. However, the “bullish” mood was only sufficient for the first hour of the trading session, after which the revival of sales on domestic markets was again noticeable.

Trading on stock exchanges in the Asia-Pacific region was predominantly in positive territory. In addition, European markets began the trading session with growth in the main indices. Thus, in the first minutes of trading, the British FTSE 100 grew by 0.5%, the French CAC 40 added 0.6%, and the German DAX 30 increased by 0.8%.

Today is not rich in macro statistics. Only later in the evening will data on the consumer confidence index in the eurozone for March become known, which, according to forecasts, should decrease by 24 points. Data on home sales on the secondary real estate market in the US for March will also become known. The figure is expected to be 5.02 million.

Among the interesting corporate news today, we can note the publication of Severstal’s operating results for the first quarter of 2013. As expected, the first quarter was more successful for the company than the last quarter of 2012. Severstal was able to increase steel production by 7% compared to the previous quarter to 3.86 million tons, and also increase sales volumes of metal products by 13% to 3.68 million tons. However, the results of the mining division look a little worse, in particular, sales of coal concentrate decreased by 7%, and iron ore sales fell by 8 %, for example, sales of metallurgical coal from Vorkutaugol, where the accident occurred at the Vorkutinskaya mine, decreased by 9%. However, the mining and metallurgical sector is still under pressure from market conditions, in particular, the price of coal concentrate decreased by 4%, and for rolled steel by 3%. As a result, we can expect a continued reduction in EBITDA margin in the first quarter to 10-11% versus 11.19% in the fourth quarter. In general, the increase in sales volumes of steel products indicates that demand is beginning to recover, and therefore, we may see an improvement in the price environment in the second quarter of this year, which will improve the results of the first half of the year. The market will take the strong operating data positively, and, most likely, in the short term we will see some recovery in the share price, which has lost 38% of its value since the beginning of the year. The target for Severstal securities is 387.21 rubles.

As of 12.40 Moscow time, Russian stock indices were in positive territory: the MICEX index grew by 0.38% (1343.51 points), the RTS index added 0.09% (1337.61 points). The growth leaders were shares of Bank Vozrozhdenie (+2.95%), KamAZ (+2.67%), TGK-2 (+2.74%), AFK Sistema (+2.36%) and VTB (+2.06%). Shares of the second largest bank by assets are increasing in price in anticipation of the publication of the credit institution's financial results for 2012 under IFRS, which is scheduled for tomorrow, April 23. The securities of Bank St. Petersburg (+4.8%) are also growing against the backdrop of the disclosure of financial results under RAS for the first quarter of this year, which turned out to be significantly better than last year’s figures for the same period. And this gives investors hope that the quarterly results under IFRS will be strong and will support quotes in the medium term.

At the moment, the external background looks moderately positive. European markets continue to be in the green zone, Asian markets and futures for American indices are also in positive territory. At the same time, world oil prices today show multidirectional movements. Brent oil is down 0.09% ($99.56 per barrel), Light oil is up 0.22% ($88.29 per barrel). It is likely that in the afternoon it is unlikely to expect active actions from the players. If sentiment on world markets continues, the Russian stock market will continue to be in the green zone. However, later in the evening, macro statistics from the US, if they turn out to be worse than expected, could cause a wave of sales ahead of the end of trading. The "Investcafe" indicator is equal to 5.5 points, which characterizes the neutral mood of exchange players.

The author is co-director of the analytical department of "Investcafe"