Driven by recovering crude, Russia’s stocks are expected to continue their Friday positive gains into Monday session. Better-than-estimated Chinese industrial output should come as another market trigger.
Markets will “most likely, continue Friday's positive
progress, and markets will keep on rising amid higher prices for
commodities,” according to Andrey Shenk, an analyst at
Investcafe.
Crude prices are recovering, even though the International Energy
Agency has lowered its 2014 oil demand growth estimate by 100,000
barrels per day. WTI is up 0.01 percent at $105.98 per barrel,
and Brent slid 0.15 percent to $108.06 a barrel. Oil prices are
an integral part to Russia’s economy, as oil and gas account for
nearly 50 percent of budget revenue.
On Friday Russian equities snapped their five day losing streak,
with the MICEX gaining 1.49 percent to 1,382.72 and the
dollar-based RTS index up 1.72 percent.
Mechel, a Russian metals and mining company - and the worst
Russian performer on the New York Exchange - rallied on China’s
positive industrial data, and may look to continue its gains on
Russian floors Monday.
Growth came to Russian floors Friday despite disappointing GDP
figures for 2Q 2013 and the decision by the Central Bank of
Russia (CBR) to keep the refinancing rate unchanged – at 8.25
percent.
Russia’s GDP slowed to 1.2 percent in 2Q 2013 year-on-year,
down from 1.6 growth in 1Q 2013, preliminary data by Rosstat said. This marked
the sixth consecutive quarter of decelerating pace of economic
activity.
“The rate decision by the CBR unfortunately demonstrates how
disconnected the central bank has become from what transpires in
the real economy,” Ivan Tchakarov, chief economist for Russia
& CIS at Renaissance Capital, wrote in an email.
US stocks quietly retreated on Friday. The Dow Jones closed down
at 0.46 percent, the S&P dropped 0.36 percent, and the NASDAQ
dipped 0.25 percent.
Sales of 10-year government bonds in France and Spain Monday
could steer market sentiment in Europe.
European indices advanced. Germany’s DAX rose 0.24 percent,
France’s CAC gained 0.30 percent, and Britain’s FTSE 100 is up
0.82 percent.
Japan’s second-quarter GDP grew by 2.6 percent, far
underperforming analysts’ expectations of 3.6 percent expansion.
The Nikkei has fallen as a result, trading down 0.63 percent at
13,529.25. Hong Kong’s Hang Seng gained 1.64 percent while the
Shanghai Composite surged 1.37 percent.