Alfa Morning Bulletin: 12 May 2021

  • Tech-led sell-off spread and deepened
  • Surging commodity prices and inflation fears send markets lower
  • Reflation trade provides support to Russian equities

Tech-led sell-off spread and deepened: The selloff in global tech stocks broadened and deepened yesterday, dragging equity markets lower, as inflation fears escalate. Attention is going to be focused on the Federal Reserve Chief’s comments today, but regardless of whether Jerome Powell and other Fed officials maintain their dovish stance, equity and bond traders are starting to price in tighter monetary policy, earlier than anticipated. The Russian market was on the back foot yesterday with mixed trends – RTSI (-1.2% @ 1,552) and IMOEX (1.2% @ 3,652). Growth and tech stocks remained under downward pressure, with investors opting for safe havens and, as a result, metals & miners and banks also declined with a few exceptions. The ruble advanced with other commodities currencies versus a weaker US dollar before weakening slightly near the close (RUB -0.1% @ 74.19). Crude quotes recovered intraday losses (Brent +0.3% @ 68.55) to close higher.

Reflation trade provides support to Russian equities: The Russian market looks set to buck the negative global trends and the downdraught from the tech selloff as the reflation trade gathers pace. Soaring commodity prices are proving strong support to Russian metal & miners and to oil & gas names to a lesser extent. Financial stocks are also in demand, with the interest rate hikes providing a tailwind to bank stocks. The strong advance in the oil price can be expected to provide additional support to Russian equities.


TCS (E/W): 1Q21 IFRS results – NEUTRAL-to-POSITIVE

Sberbank (O/W): April 2021 RAS results – MODERATELY POSITIVE

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The contents of this document have been prepared by Joint Stock Company “Alfa-Bank” ("Alfa Bank") as Investment Research within the meaning of Article 36 of Commission Delegated Regulation (EU) 2017/5...

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