Daily Review. 5th November, 2009

Russian equities were back in bearish mode on Tuesday. The market was still under pressure from a decline in European bourses and falling oil prices. The RTS Index managed to end the session 0.83% higher on a stronger dollar, while the MICEX Index shed 3.78%.

O&G names moved lower on falling crude prices, as Gazprom sank 3.8%, Rosneft pulled back 4.2% and Lukoil plunged 3.7%. Banking names underperformed on reports UBS posted losses and RBS needs additional state aid, with Sberbank diving 4.8% and Bank VTB sinking 6.1%. Steels closed mostly lower along with the market and slightly outperformed, as MMK declined 2.8%, NLMK gave up 6.3% and Severstal ended 3.6% lower.

US benchmarks, except for the NASDAQ, finished Wednesday in positive territory. Support came from the Fed’s decision to hold the federal funds rate steady. Asian exchanges are in decline this morning, with losses mostly seen in consumer and financial plays. Crude contracts are retreating now, with Brent futures trading around USD 78.20 a barrel.

According to our outlook, Thursday morning's news flow looks rather unfavorable for the Russian stock market. However, the sharp rise in oil prices on Wednesday could shore up the benchmarks. Softening demand for global financials could negatively impact domestic banking names. A string of macroeconomic data capable of driving the market is due out today. Specifically, rate decisions by the Bank of England and the ECB will be made public, and EU retail sales and US jobless claims will also come out.