Alfa Morning Bulletin: 31 July 2020
- Russian equity market declined yesterday amid negative global backdrop and weak macro data (US 2Q GPD plunged 32% y/y)
- Asian markets are mixed although generally trending lower, as Covid-19 cases increase and more lockdown measures emerge
- Key news: Results from Sberbank, EVRAZ, Magnit; Nornickel shareholder tensions rise (neutral) and more
Markets plunge lower on dismal macro data, bleak growth outlook as Covid-19 cases grow: The Russian equity market declined yesterday – RTSI (-2.7% @ 1,232) and IMOEX (-1.2% @ 2,822) – amid a negative global backdrop due to a bleak growth outlook on Covid-19 worries and weak macro data (US 2Q GPD plunged 32% y/y). The ruble retreated (-0.8% @ 73.17) while oil prices inched higher (+0.5% @ 43.14). European markets dropped to three-week lows (StoxxEuro600 -2.1%) and US markets also retreat S&P500 (-0.3%), albeit the Nasdaq (+0.5%) closed higher on strong tech earnings.
Mixed backdrop but Russia may eke out an advance: This morning Asian markets are mixed although generally trending lower, as Covid-19 cases increase and more lockdown measures emerge, including across parts of England. The US dollar is at a fresh low (DXY -0.5% @ 92.56) while commodity prices are edging higher – Brent (+0.9% @ 43.32) and gold (+0.9% @ 1.972). That said, Chinese factory beat estimates in July, advancing for a fifth month. As a result, commodity stocks, including gold producers, may lift the Russian market higher today, although gains will be capped by the negative global macro backdrop.
Key events today: Inter RAO board discusses a new strategy. Novatek deepens 2020 capex cuts while eyeing dividend boost. MD Medical reports 1H trading update.
- 1 Macro Analysis/Global IMF points to material currency misalignment in several key EMs
- 2 Flash Report/Lebanon Lebanon flash: Beirut explosion another tragic blow to a country in crisis
- 3 Strategy Note/China 'Splinternet' problems for EM equity investors
- 4 Macro Analysis/Global QE in EM: The potential trade opportunities
- 5 Sovereign Analysis/Argentina Argentina: What next after the restructuring agreement