Brent oil prices are looking at around $100 per barrel

Elena Kozhukhova, Analyst of IC "VELES Capital" 18 September 2023 11:47

The external background on Monday morning can be called ambiguous. Oil prices continue to rise after last week's increase, and sentiment on global stock markets is mixed. The Russian stock market will continue to adapt to higher interest rates in the country after another tightening of monetary policy on Friday.

Trading on the US stock exchanges on Friday ended with a 0.8-1.5% decline in the three main indices, led by the high-tech Nasdaq, which fell below the short-term support of 13,750 points. Profit-taking before the Fed meeting took place, in particular, on shares of chip manufacturers. At the same time, macroeconomic statistics showed the stability of the American economy, allowing us to expect new interest rate hikes by the Fed before the end of this year. Thus, the growth of US industrial production in August slowed from 0.7% to 0.4% mom (+0.1% was predicted), the preliminary index of consumer expectations of the University of Michigan for September increased from 65.5 to 66.3 points (66 points were predicted), and the index of inflation expectations for the coming year decreased from 3.5% to 3.1% (+3.5% was predicted).

Futures for the S&P 500 index are adding about 0.2% in the morning as part of a correction. The key event of the coming week will be the Fed meeting, at which interest rates are not expected to rise. Nevertheless, the regulator may give a "hawkish" signal for the coming months.

Trading in Europe on Friday ended with an increase in the Euro Stoxx 50 index by 0.4%, which lost a significant part of the intraday gain and remains under medium-term downward pressure. In the coming week, the markets will be waiting for the meetings of the Bank of England, eurozone consumer inflation and German manufacturing inflation, as well as preliminary estimates of European business activity for September.  

There is no uniform dynamics at trading in Asia in the morning. Japan's stock exchanges are closed for the day off. The Australian ASX 200 lost about 0.7%. Chinese indices are rising within 1% after better-than-expected macroeconomic data for August, published last week, as well as a reduction in the rate of mandatory Reserves by the People's Bank. Hong Kong's Hang Seng is falling 1.3% under pressure from real estate stocks and fears of defaults in the industry.

The nearest futures for Brent and WTI crude oil are adding a little more than 0.5% in the morning session after an increase of about 4% last week. The quotes started the week with an update of the highs from November 2022 and are located above $94 and $90, respectively, with the nearest resistances of $95 and $92. Brent oil prices as a whole, apparently, are set to develop growth in the region of $ 100 due to the risks of a supply shortage in the fourth quarter of this year, as well as a possible acceleration of the Chinese economy due to stimulus measures.

The Moscow Exchange and RTS indices retreated from the lows of the day on Friday and rose by 0 .4% and 1% respectively. The Moscow Exchange indicator, however, remains below the resistance of 3180 points, which indicates the predominance of short-term sellers in the market and the risks of retesting the level of 3100 points. The dollar RTS is held above 1000 points due to the stabilization of the ruble.

The ruble is weakening in the range of 0.5% against the dollar, euro and Chinese yuan this morning on the Moscow Exchange, being located at 96.80 rubles, 103.20 rubles and 13.25 rubles, respectively. The Central Bank of the Russian Federation at Friday's meeting, as expected, raised the interest rate from 12% to 13%, leaving the possibility for further tightening of policy until the end of the year. The Russian currency reacted to the news with restraint and generally continues to trade in a narrow range.

At the beginning of the trading day, the Russian stock market may try to climb higher, maintaining the bullish momentum of the end of last week, as well as receiving support from high oil prices. Friday's increase in the interest rate of the Central Bank of the Russian Federation turned out to be restrained, although it is negative for the Russian economy in the medium term. In general, we should expect the return of larger-scale purchases to the Russian market only when the Moscow Exchange index is fixed above 3180 points (the average Bollinger band of the daily chart). Abroad, sentiment is deteriorating due to the risks of a new peak in inflation due to high oil prices, as well as the continuation of the tough policy of central banks.

Elena Kozhukhova, Analyst of IC "VELES Capital"

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