Daily Review. 27th October, 2009

Trading was quite uneventful for the most part of Monday’s session, but a deteriorating external news flow just ahead of the closing bell intensified sell-offs in most liquid names. As a result, the MICEX Index dropped 0.5%, while the RTS Index, up 1%, closed before reflecting a change in the external environment.

O&G plays, except for Gazprom (+0.2%), landed in negative territory, as Lukoil dipped 1.4%, Rosneft declined 0.5% and Surgutneftegaz eased 0.3%. No single trend emerged in state-owned banking names, with Sberbank edging down 0.8% and Bank VTB advancing 0.3%. Norilsk Nickel stocks took a 1.2% drop under pressure from a local pullback in prices for the holding’s primary commodity groups. Steels experienced no major fluctuations, as Severstal closed flat, MMK inched up 0.2% and NLMK fell 0.2%.

US exchanges were again in bearish mode Monday, with the S&P 500 Index falling 1.2%, while financials and commodity issuers led the decliners. Concerns that stimulus measures are losing their effect put pressure on Asian equity markets as well, with the key benchmarks losing as much as 2%. A stronger dollar amid local softening of demand for risk exerted an adverse impact on commodity markets, as WTI futures dropped below USD 79 a barrel and primary groups of base metals also moved lower.

According to our outlook, Tuesday morning's news flow is unfavorable for the Russian stock market. Financials and metal issuers could come under the heaviest pressure. US CCI is due out in the second half of the session today and market players expect this indicator to rise to 53.5.