Daily Review. 20th October, 2009

Domestic equity benchmarks moved higher amid rising oil prices and bullishness on Western markets, with the RTS Index advancing 1.75% and the MICEX Index surging 3.66%.

Rallying crude prices were the primary upside driver for O&G names, with Gazprom rising 2.3%, Rosneft leaping 2.9% and Lukoil gaining 1.8%. Banking names ended the session among the outperformers on a weakening dollar, as Sberbank climbed 6.5% and Bank VTB spiked 5.1%. Most steel issuers also enjoyed hefty demand, as MMK added 1.4%, NLMK climbed 5.1% and Severstal rose 4%.

US indices added an average 0.9% Monday on a string of robust corporate earnings reports. Asian markets are also on the rise, stoked by Apple’s stronger-than-expected sales and profit and the Reserve Bank of Australia intention to lift interest rates further once economic growth picks up. Weakness in the greenback had a positive impact on commodity markets, with Brent futures jumping to USD 78 a barrel.

We think Tuesday morning’s news flow is favorable for the Russian equity market and expect most liquid names to move higher at the open. O&G plays could lead the gainers on the back of rising oil contracts. The Bank of Russia is to hold a board meeting today that could consider another refinancing rate cut. A decision to lower the rate could exert a positive impact on the market as a whole. US new home starts, due out at 4.30 pm Moscow time, could also impact market sentiment today.