The Russian market may continue trading in the range

Elena Kozhukhova, Analyst of IC "VELES Capital" 19 September 2023 11:54

The external background on Tuesday morning can be called moderately negative. Oil prices continue to update their highs since November 2022, and the mood on world stock markets is mostly pessimistic. Trading in Polymetal shares will resume on the Moscow Exchange after redomicilation.

Trading on the US stock exchanges on the eve ended with an increase in the three main indices within 0.1%, which consolidated at important short-term supports (in particular, 13750 points for Nasdaq and 4450 points for the S&P 500) in anticipation of new drivers of movement. The risks of suspending the work of the government in October in the event of the inability of Congress to reach an agreement on its financing have become relevant again in the market, which creates additional tension. In addition, investors are waiting for the results of the Fed meeting in the middle of the week.

Futures for the S&P 500 index are losing about 0.1% in the morning, continuing consolidation. Tuesday will be marked for exchanges by the publication of the first data on the country's housing market for August.

Trading in Europe on the eve ended with a decline in the Euro Stoxx 50 index by 1.1%, which does not find positive drivers in the conditions of continued weakness of the regional economy. On Tuesday, the final data is likely to confirm eurozone consumer inflation in August at 5.3% YoY – still a high level, exceeding the ECB target.

The negative dynamics prevails at the auctions in Asia in the morning. Japan's Nikkei 225 dropped 0.8% after a long weekend. The Australian ASX 200 lost about 0.5%. Chinese indices are falling within 1% amid continued concern about the debt problems of the national real estate sector. Hong Kong's Hang Seng has hardly changed positions.

The nearest futures for Brent and WTI crude oil are adding about 0.5% in the morning session after rising by less than 1% the day before. Quotes continue to update multi-month highs and on Tuesday exceeded the levels of $95 and $92.50, respectively, from which they subsequently retreated slightly lower. Buyers have not yet decided on a new wave of growth, which could take the price of Brent oil to the region of $ 100 per barrel, but in general they retain a leading position in the market. The main bullish factor for the market remains the risks of limited supply due to the reduction of oil production by Saudi Arabia and Russia, as well as a decrease in shale production in the United States.

The Moscow Exchange and RTS indices fell by about 0.5% the day before, unable to resist the highs of the day. The Moscow Exchange indicator has been mainly fluctuating in the range of 3110-3180 points in recent sessions, remaining under the main downward pressure since the first half of September. The dollar RTS has been "squeezed" between 1000 and 1065 points since the beginning of September.

The ruble is strengthening this morning on the Moscow Exchange within 0.5% against the dollar, euro and Chinese yuan, being located at 96.25 rubles, 102.80 rubles and 13.15 rubles, respectively. Vladimir Putin yesterday instructed the Central Bank of the Russian Federation and the Ministry of Finance not to postpone measures to strengthen the ruble, which at least promises to maintain the attention of the authorities to devaluation trends. 

At the beginning of the trading day, the Russian stock market probably will not show significant changes, continuing to move within a narrow range in anticipation of new drivers. An interesting fact is the resumption of trading in Polymetal shares on the Moscow Exchange after redomicilation. However, there have been no significant changes in gold prices since the end of July, when trading was suspended, and therefore interest in the securities may be speculative. Trading in VK receipts, on the contrary, will be suspended due to redomicilation. Shares of oil and gas issuers may receive support in the conditions of high oil prices, while ALROSa remains under downward pressure due to the risks of increased sanctions against Russian diamonds.

Elena Kozhukhova, Analyst of IC "VELES Capital"

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