Morning Note /
Russia

Alfa Morning Bulletin: 20 December 2021

  • Russian equities slump with global markets

  • Russian stocks poised to extend losses

  • Rapid spread of Omicron sends markets lower

Alfa
20 December 2021
Published byAlfa

Russian equities slump with global markets: Russian equities got caught in a global selloff on Friday – RTSI (-1.4% @ 1,583) and IMOEX (-0.7% @ 3,723) – driven by the spread of Omicron and more hawkish central banks. The ruble retreated (-0.5% @ 74.15) despite the Bank of Russia hiking the key rate 100bp to 8.5%. Crude prices fell on fears the spread of Omicron may impact the growth outlook (Brent -2.0% @ 73.52).

Russian stocks poised to extend losses: Russian stocks can be expected to extend their losses today as risk-off mood grips global markets. The spread of Omicron saw the Netherlands go into lockdown on Sunday putting pressure on others to follow, including Italy and the UK, though the US seems set to remain open for now. While coronavirus restrictions cloud the outlook for economic growth, they also risk keeping inflation elevated and turning central banks yet more hawkish. On Friday, Federal Reserve policymakers caught the market off guard laying out a case for raising interest rates right after the central bank ends its bond-buying program in March. Oil prices are down more than 3% this morning and gold has moved back above $1,800/oz as investors seek out haven assets. With volumes on Western markets likely to be low this week and news flow light, developments with Omicron are likely to dictate market direction.

KEY NEWS

CBR increase its key rate by 100bp to 8.5%, maintaining a hawkish stance – Neutral