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Reports Russia

Russian stock market daily morning report (March 20, 2014, Thursday)

March 20, 2014, Thursday, 16:50 GMT | 12:50 EST | 21:20 IST | 23:50 SGT
Contributed by Veles Capital


Stocks

Market today. Generally, the trade at the European and Russian markets was mildly negative today. The oratory of the chairman of Fed Janet Yellen on Fed possibly finalizing the program of bonds buyback (QE3) in half year and upping the base rates affected the sentiment. Statements and hints that Fed might cut the support to the US economy have been making the market shiver for more than a year now. The current reaction of the market might be taken as a mild one, which might be explained by the fact that expectations of the monetary policy tightening have already been included in the evaluation of stocks.

Stats of the retail selling in Russia for February showed 4.1% growth yoy (2.6% growth yoy was expected) mainly at the expense of the increase of demand of nonfoods (+6.4% yoy). In its turn, growth of demand for nonfoods has been provided by devaluation of ruble and sharply increased expectations of inflation growth, which usually stimulates buying durable goods. Later on we might be expecting the opposite – slowdown of the consumer demand.

Market tomorrow. The matters related to Ukrainian territory crisis are no longer among the top headlights. Given means the Russian market is gradually getting back to normal. That is a positive signal as the investors are returning to shares as they earlier were threatened by the possibility of a military conflict or serious restrictions. But on the flip side, given situation leads to macroeconomic starting to define the dynamics of stocks, and the numbers do not provide for local optimism.

Numbers on the initial jobless claims in US posted at 4:30 pm have generally turned out to be within the frames of expectations and did not affect the stocks dynamics. Normally the data on the US labor market makes quite a significant effect on the dynamics of shares. However, we expect the importance of the given estimate to fade as Fed announced its decision not to refer its monetary policy to the employment situation any longer. The data on volume of buildings sold in the US came out by the trade close at the Russian market (6:00 pm MSK) and the numbers appeared to be in line with targets.

We assume that output of labor market data and real estate market of the US being in line with targets is a positive factor for the stock markets as given indicates decrease of the level of uncertainty.


Bonds

Market today. The Russian debt market slipped down under the pressure of news on the possible increase of UST rates next year. Risks of further restrictions on behalf of US and EU were also pressing. Therefore, on the threshold of the European summit, the activity of the investors at the Russian market has reduced significantly. Yield of BFL grew for Thursday by 1-6 bps. In the corporate segment, Norilsk Nickel MB-2, Vimpelcom-4 and RSHB-10 were under the most pressure. Eurobonds have also slipped slightly. Russia-43 managed to stay at 9.42% of the nominal, Russia-23 lowered 30 bps to 96.93% of the nominal.

Market tomorrow. Friday the negative dynamics probably preserves at the background of lack of fresh stimulus to grow. In case the negative news comes out on the restrictions, the Russian loans might experience extra pressure.