Morning Note /
Russia

Alfa Morning Bulletin: 6 September 2021

  • Markets assumed a holding pattern but signs of risk-on after employment report

  • Russia investors were largely defensive Friday

  • Russian equities poised for advance as investors bet on delayed tapering

Alfa
6 September 2021
Published byAlfa

Markets assumed a holding pattern but signs of risk-on after employment report: Markets moved into a holding on Friday ahead of the monthly US employment report, although there were signs of risk-on creeping into sentiment after the release of the report, which substantially missed estimates. Russian stocks pared opening losses and closed with strength – RTSI (+0.4% @ 1,734) and IMOEX (+0.1% @ 4,007) – with gains concentrated in utilities stocks and metals producers as investors turned defensive. The Russian stock market was the best performing last week, with the MSCI Russia Index adding 4.2% vs a 3.4% gain for the MSCI EM Index and flat performances on average for the major DM Index in Europe and the US. The ruble advanced (+0.2% @ 72.73) and delivered a weekly gain of 1.1%. Crude prices closed with weakness (Brent -0.8% @ 72.48) after OPEC+ opted to raise output, with Brent posting a 0.1% retreat for the five days.

Russian equities poised for advance as investors bet on delayed tapering and more stimulus globally to head off economic slowdown: Russian equities can be expected to advance further today, catching a tailwind from the optimism seen across Asia this morning, as investors bet that weak macro data across the globe may lead to delayed tapering and the prospect of additional stimulus from countries including China and Japan. European and US stock futures are also trading in positive territory, although volumes can be expected to be low, with the US markets closed for Labor Day. The dollar is trading near a one-month low versus major peers this morning, supported by a widening of Treasury yields, as investors pushed back expectations for when the Federal Reserve will begin tapering its massive stimulus. Oil prices are down this morning (Brent +1.4% @ 71.61) are investors are concerned the poor pace of US hiring would be a drag on demand. We expect cyclical stocks to lead the gains in the Russian stock universe, with ample upside seen in value stocks such as banks globally.