Daily Review. 6th November, 2009

Domestic equities turned bullish Thursday on the back of a positive external news flow, while in the second half of the session after strong macroeconomic came in from the US the benchmarks advanced at a more confident pace, with the RTS Index inching up 0.03% and the MICEX Index surging 3.29%.

O&G plays locked in gains on an upturn in oil contracts, as Gazprom gained 3.3%, Rosneft jumped 3.6% and Lukoil climbed 3.1%. Banking names went up in line with the market, as Sberbank shot up 2.6% and Bank VTB closed 3.4% higher. The performance of metal issuers nearly mirrored market trends, with MMK soaring 4.5%, NLMK advancing 2.2% and Severstal ending 3.8% higher. AvtoVAZ stocks soared 15.7% on reports the automaker will receive state financial assistance.

US stock indices posted average 2% gains Thursday on positive economic data. Investors were cheered by lower-than-expected jobless claims and improved labor productivity. Against this backdrop, Asian benchmarks are on the rise this morning with additional gains coming from a revised forecast for the national economy by the Reserve Bank of Australia. Commodity markets also look strong today, with Brent futures currently trading around USD 78.60/bbl.
We think Friday morning’s news flow is favorable for the Russian equity market. Domestic banking names could outperform today after sharp gains by US financials. Crude prices are moving higher, but are still below price levels at which Russian exchanges closed yesterday. For this reason, O&G plays could lag behind the market. US unemployment numbers, due out at 4.30 pm Moscow time today, will be a key market driver.