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Reports Russia

Russian stock market daily evening report (June 17, 2014, Tuesday)

June 17, 2014, Tuesday, 16:48 GMT | 11:48 EST | 20:18 IST | 22:48 SGT
Contributed by Veles Capital


Stocks

Market today. The Russian exchange market went sideways after a month and a half growth, consolidating at the level 1,480-1,500 points. At that the possibility of the resistance level at 1500 at MICEX will unlikely be passed. Shares of Mechel went 7.5% due to news on reduction of debt load of the company at the expense of 215 bn RUR given by creditors.

Stats on the US were mixed. Inflation in US continued growing. Monthly change of the consumer prices formed 0.4% instead of 0.2% target; in annual terms - 2.1% vs 2%. Despite the fact that such dynamics does not reflect the threat of rapid inflation growth, gradual acceleration of growth rates is an extra region to continue cutting QE. Along with that,  data on new construction in US turned out to be worse than expected. The number of new construction for May formed 100K vs 1030K, the number if construction permits for construction -991K vs 1050K.

Market tomorrow. The trade open in US enforced the correction after the nearly three week growth, which will be making a negative impact on the dynamics of trade at the Russian market. Due to the two-day session of Fed the volumes of trade will reduce as the market participants will be waiting for the results to be announced. The oil quotes, that stand at the level of 112 USD per barrel at the back of escalation of the military conflict in Iraq and will support the shares of oil names at the Russian exchange market. We do not expect growth of share on the threshold of dividend cutoffs. As for the dividend shares we outline the preferred shares of Surgutneftegas, common shares and preferred shares Bashneft, and the common shares of E.ON Russia and MTS.


Bonds

Market today. The domestic market continued slipping down following ruble that is getting weaker.  In the afternoon data on an explosion at the gas pipeline in Ukraine added more negative. BFL curve grew 3-6 bps. Eurobonds traded with no serious dynamics for the most part of the day. Russia-43 won back after loss overnight and grew up to 105.4% of the nominal, Russia-23 - 50 bps to 102.4% of the nominal.

Market tomorrow. We assume the sideways motion is possible on the threshold of Fed' decision on the QE program and statement of Janet Yallen. At that the domestic segment will be under pressure of problems in Ukraine.

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