Daily Review. 10th November, 2009

Domestic equities moved resolutely higher on Monday amid bullishness on global stock and commodity exchanges, with the RTS Index edging up 0.16% and the MICEX Index soaring 5.05%.

O&G names posted gains following an upsurge in oil futures, as Gazprom climbed 3.9%, Rosneft jumped 6.6% and Lukoil rallied 5.2%. Banking names ended the session among the outperformers, partly on the back of a stronger ruble, as Sberbank surged 6.2% and Bank VTB added a hefty 8.1%. Steel makers advanced in stride with the market, with MMK rising 4%, NLMK gaining 5% and Severstal shooting up 4.7%.

Bullish sentiment held sway on the US stock market Monday. Key benchmarks added an average 2% on reports G20 member states will not phase out stimulus programs. Asian indices are also on the rise. Optimism came from better-than-expected auto sales numbers and real estate prices in China. Commodity markets experienced a correction after a steep rise, with gold and oil prices retreating. Brent contracts are currently trading in the vicinity of USD 77.30 per barrel.

We think Tuesday morning’s news flow looks ambivalent for the Russian stock market. On the one hand, upside on US and Asian exchanges could lend support to domestic equities. On the other hand, taking into account Monday’s rally, a contraction in US index futures could spark a correction. If oil prices keep falling, this could exert an adverse impact both on the market as a whole and O&G plays.