Friday trading on the Russian market could not end with a unified dynamic: the Moscow Exchange index rose by 0.35% to 3300.07 points, while the RTS index fell by 1.2% to 1119.66 points. The ruble index remained almost unchanged. Market participants are likely cautious as they await the announcement of the results of the presidential elections.
“Russian issuers are publishing conflicting financial reports, with large oil and metallurgical companies showing weaker results while non-commodity sector issuers (financial sector, construction companies) demonstrate strong financial growth,” commented Natalia Milchakova, a leading analyst at Freedom Finance Global.
The dollar exchange rate this week returned to the upper part of the 90.5-93 ruble range. The dollar in the second half of the day hit a weekly high. Support for the Russian currency is coming from expensive oil. “However, its positive effect will be noticeable in a couple of weeks,” clarified Vladislav Silaev, senior trader at Alfa-Capital.
“Demand for currencies is being driven by increasing concerns about the prolongation of high interest rate periods, raising risks for the economy and financial markets, mainly the debt market, as well as investor uncertainty about the maintenance of large export sales next week. An additional factor has been the strengthening of the dollar, most in demand by importers and speculative participants, in global markets,” say analysts at PSB, noting that next week the ruble is likely to continue weakening, and the dollar rate will test the 93-93.5 ruble range, which has been a resistance since early December.
Friday trading on the Forex market saw the dollar close at 92.72 rubles, while the euro increased to 100.94 rubles.
Oil prices rose confidently this past week, climbing nearly 3% and settling above $85 per barrel for Brent. The main support for oil futures has been positive expectations for increased demand in the US and a higher global demand forecast of 200 thousand barrels per day for oil from IEA.
Currently, Brent crude oil futures are trading at $85.32 per barrel, with Light at $81.11 per barrel.
On the paper market, LSR stock (-8%) led the losers. Natalia Milchakova explains the stock’s dynamics as profit taking after the company’s strong financial report.
RUSAL shares (-0.3%) fell despite strong IFRS results – the results exceeded expectations, but the company’s debt burden is still significant. Without a confident increase in aluminum prices, the company will not be able to show strong results in the future.
Closing Friday in the negative were Tatneft shares (ord -3.2%, pref -2.8%), QIWI (-1.5%), Mechel (pref -1.4%), RusHydro (-1.1%), OGK-2 (-1%), Lenta (-0.8%), M.video (-0.8%). On the positive side were OZON (+2.1%), Moscow Exchange (+1.8%), Segezha (+1.7%), NLMK (+1.6%), RussNeft (+1.3%) shares.
Depository receipts for Headhunter (+3.4%) showed strong growth today on expectations of completing the redomiciliation process.
Globaltrans receipts (+3%) reacted to the completion of redomiciliation from Cyprus to the UAE, giving investors hope for a prompt resumption of dividend payments.
Sovcombank shares (+1.2%) reacted to the IFRS financial report for 2023. The bank’s net profit was 95 billion rubles, compared to a loss of 18.6 billion rubles the previous year.
Friday’s trading closed above 3300 points. “But since the candle closing was closer to the day’s lows, it is still too early to talk about the end of the correction, as the potential for further decline remains to the 3280 points level. In the worst-case scenario, a move to the next support at 3250 points is possible,” commented Nikita Stepanov, an analyst at Finam FG.
