Daily Review. 22nd October, 2009

Domestic equities kicked off to the downside Wednesday, but the benchmark clawed back its losses and managed to head higher on the heels of strong earnings reports published by American corporations and an uptick in US indices, with the RTS Index inching up 0.03% and the MICEX Index advancing 0.84%.

O&G plays took a sharp leap heading into the final bell as oil prices rallied, with Gazprom adding 0.3%, Rosneft rising 1% and Lukoil edging up 0.2%. Sberbank stocks grew 2.2%, while Bank VTB eased 0.6% after the publication of ambiguous financials. Steels lagged behind the market, as MMK lost 1.6%, NLMK pulled back 2.8% and Severstal eased 0.9%.

US benchmarks opened higher yesterday after Yahoo released impressive financials, but before the final bell investors were disappointed by Boeing’s earnings report and analysts’ negative recommendations. For this reason, the benchmarks ended the day in the red. Asian indices are also heading south this morning. China’s GDP grew 8.9% in 3Q, meeting analysts’ expectations. Oil contracts spiked after the US petroleum inventory report came out. Brent is currently trading around USD 79.50 per barrel.

According to our estimates, Thursday morning's news flow is unfavorable for the Russian stock market. At the same time, a downtick in Asian benchmarks and US index futures will put pressure on the market. Meanwhile, higher crude prices could lend support both to the market as a whole and O&G plays in particular. A plunge in US financials could turn into an additional downside driver for domestic banking names. As for important economic data, we recommend investors to keep an eye on retail sales in the U.K., jobless claims in the US and the American Index of Leading Indicators.