The Russian stock market opened on Tuesday with a decline in the prices of the majority of blue chips amid worsening external stock and commodity conditions (metals are getting cheaper); The RTS and Moscow Exchange indices fell by 0.4-0.7% per minute of trading, led by the securities of Surgutneftegaz, Rostelecom and Transneft after the cut-off of the companies’ annual dividends on the stock exchange.
By 10:01, the Moscow Exchange index amounted to 2082.48 points (-0.7%), the RTS index – 1163.82 points (-0.4%); prices of the majority of „blue chips” on the Moscow Exchange fell by 14.5%.
The dollar sank to 56.11 rubles (-0.25 rubles).
Shares of Rostelecom fell in price (-7.2% and -6.5% of prefs), Surgutneftegaz (-3.2% and -14.5% of prefs), Transneft (-6.4 %), OZON receipts (-1.5%), shares of Polymetal (-1.2%), MMK (-1.1%), TCS Group receipts (-0.8%), shares of LUKOIL ( -0.7%), MTS (-0.7%), Severstal (-0.6%), Inter RAO (-0.6%), Nornickel (-0.3% ), Aeroflot (-0.2%), Gazprom (-0.2%), Sberbank (-0.2% and -0.3% of preferred shares), NOVATEK (-0.2 %), Moscow Exchange (-0.1%), UC Rusal (-0.1%).
The shares of Detsky Mir (+3.9%), AFK Sistema (+0.8%), NLMK (+0.5%), Yandex (+0.5%), Gazprom Oil Company (+0.4%), PJSC Polyus (+0.4%), ALROSA (+0.2%), Rosneft (+0.2%), VTB (+0.2%) %), Magnit (+0.1%).
In the second quarter of 2022, the retailer Detsky Mir increased its total sales volume (GMV) by 11.6% compared to the same indicator for 2021, to RUB 46.7 billion including VAT. Net revenue grew by 10.5% to 41.3 billion rubles, the company said.
Andrey Kochetkov, a leading analyst at Otkritie Research for global studies, notes that the external background on Tuesday morning can be called negative. Asian markets are mainly declining amid problems in the Chinese economy, oil has stabilized after a rapid growth a day earlier. Investors are waiting for the decisions of the ECB and the Bank of Japan on monetary policy. The Russian market will start the day with a moderate decline. The ruble, on the contrary, is capable of further strengthening against the backdrop of approaching tax payments.
According to Vladimir Solovyov, chief analyst at Promsvyazbank, key stock exchanges in the Asia-Pacific region show mixed dynamics on Tuesday, futures for US and European indices are in the green zone, and oil has halted growth.
Tuesday will also be rich in significant economic news and corporate reports. In particular, the publication of data on consumer inflation in the euro area and data on the US real estate market for June is expected. From corporate reports, attention should be paid to Johnson & Johnson, Halliburton and Lockheed Martin. The dynamics of the markets will depend on the results of companies, most likely, reporting will be weaker than expected due to rising inflation and costs in the reporting quarter. Therefore, we can expect the development of negative sentiment in global markets.
The likely growth of the dollar against the ruble may compensate for the pressure due to the dividend cut-off of Surgutneftegaz shares. The target range for the Moscow Exchange index on Tuesday is 2050-2150 points. Of significant corporate news, Detsky Mir’s operating results for the second quarter are of interest.
As Ekaterina Krylova, managing expert at Promsvyazbank, notes, Brent oil prices jumped up on Monday amid improved market sentiment and the absence of an agreement between the US and Saudi Arabia to increase production of raw materials (the supply shortage factor remained in force). In anticipation of the Fed meeting next week, information appeared that the market was laying down a less rigid rate increase (by 0.75 pp rather than 1 pp), which, coupled with some weakening of the dollar, supported oil.
On Tuesday, Brent oil will slow down at the pace of the rebound and will rather consolidate around $105 per barrel. The risks of a slowdown in the global economy remain significant, which will constrain optimism in the oil market.
In the US stock indices reversed sharply the day before and ended trading with a decline of 0.7-0.8%. Investors reacted negatively to media reports that Apple plans to reduce the rate of hiring new employees and increase capex next year in anticipation of an economic downturn. After this news, shares of tech companies went down.
Investors continue to analyze the quarterly reports of banks and financial companies and are trying to link the negative forecasts of experts for the economy with the still relatively positive expectations for corporate profits.
On Tuesday in Asia, the dynamics of the indices were mixed (the Japanese Nikkei 225 rose 0.7% after the weekend, the South Korean Kospi fell 0.2%, the Chinese Shanghai Composite rose 0.01%, the Hong Kong Hang Seng lost 0.8%), but „plus” American stock futures (the contract for the S & P 500 grew by 0.5%).
The markets remain concerned about the rapidly rising inflation in developed countries.
The Reserve Bank of Australia (CB of the country) signaled its intention to continue tightening monetary policy, showed the minutes of the July meeting of the regulator, at which the rate was raised by 50 bp to 1.35% per annum. The bank believes that interest rates are still „very low” amid the current labor market and a period of high inflation.
On the oil market in the Asian session on Tuesday, prices stabilized after a strong rise the day before, when WTI futures closed above $100 per barrel.
September Brent futures cost $106.09 per barrel by 10:01 am Moscow time (-0.2% and +5.1% on Monday), August WTI price was $102.58 per barrel (-0.02% and +5.1% the day before).
The rise in prices the day before was caused by two factors – market participants’ assessment of the results of US President Joe Biden’s visit to Saudi Arabia and the depreciation of the dollar.
As reported, Biden discussed with the leadership of Saudi Arabia the issue of oil supplies to the world market and called this discussion „positive”, but investors felt that the country would not significantly increase production and export of fuel.
In the meantime, the dollar, which has grown significantly in recent weeks on expectations of a tightening of the monetary policy of the Federal Reserve System (Fed), fell on Monday against major world currencies, which provided additional support to oil quotes.