Daily Review. 3rd October, 2008

Sell-offs prevailed on the domestic equity market Thursday under pressure from external negativity and a bearish trend on international commodity markets. The RTS Index closed out 3.06% lower and MICEX shed 4.04%. Utilities stocks emerged as the standout gainers as RusHydro surged 5.5%, OGK-3 jumped 4.5% and OGK-4 added 2.1%. Oil names declined in synch with the market as Lukoil lost 3.1%, Gazprom dropped 3.5% and Rosneft tumbled 7.8%. Financial plays remained southbound and exhibited the strongest resistance to external negativity with Sberbank falling 1.5%, VTB receding 4.8% and Vozrozhdenie Bank closing 8.5% lower. After a brief hiatus, metals shares again underperformed the market as Norilsk Nickel sank 6.9%, Severstal descended 7.6%, NLMK declined 6.3% and MMK landed 6.7% down. On the downside, Polyus Gold plummeted 15.3%, although the company released fairly good 1H 2008 financials.

US trading floors again nosedived, with the S&P 500 sinking more than 4% by the final bell yesterday. The main negative factors include new signs that the financial crisis is spilling over to the real economy and the intention of a group of Republicans in the House of Representatives to slash financing for the bailout package nearly 3-fold. Asian markets also slipped into the red this morning and the benchmarks in the region dropped by an average 2-3% on expectations of shrinking demand for export products. Commodity markets continued to correct down on fears of a slowdown in the global economy, with industrial metals being the hardest hit. This morning's news flow will do little to inspire optimism among domestic investors. Ongoing massive sell-offs on global capital markets point to a downturn in early trading on the Russian stock market. Norilsk Nickel's 1H 2008 financials, which are due out today, can hardly reverse the current market trend. Investors will be focused on US employment data which are due out at 4.30 pm MSK today.