FOREX and Stock Market Analysis

On Friday, July 3, tenders for the Russian stock pads were in the red zone against the backdrop of an external negative. Leading indexes falling to 1,5%. Oil prices continue to drop, but at a pace as the previous day. Closed on U.S. and, consequently, a lack of looking at the overseas sites have led to the lateral dynamics of bidding in the second half of the day and reduce the volume of purchases, sales. Worse market traded securities of Gazprom (-2.30%), MMC Norilsk Nickel (-2.50%) and Sberbank (-2.30%). Shares of individual companies have the support of corporate news - is, first of all, Uralkali (increasing prices for the products) and IDC Holding (transition to a single share in 2011).

Last week did not bring significant changes in the situation on the Russian stock market. The growth that we saw earlier in the week, was completely reverse in the second half. After active bidding, due to positive trends in global platforms and a significant growth in commodity markets, investors have shifted to sales - the reason this has become a way of regular statistics on the labor market in the United States. The number of jobs in non-agricultural sector over the past month fell by 467 thousand, while unemployment reached 9.5% - the highest level since 1983. Similar news refute established in recent opinion about the U.S. economy out of recession. Also on Wednesday published the data on stocks of petroleum and petroleum products. U.S. Department of Energy report last week showed another increase in gasoline stocks and destsilyantov, which indirectly indicates a decrease of fuel consumption in rail and trucking, and, consequently, indicates a weak economy. All this had a negative impact on the quotes of black gold. Light Crude Oil stamps lost in the price of 8%, down from $ 73 to $ 67 a barrel. Falling prices also contributed to the strengthening of the dollar and the U.S.. Such movement of commodity markets has had a very negative impact on the domestic stock market quotes.

Next week we expect to preserve the negative sentiment on the stock markets. In the beginning of the week should not be ruled correct. The fact is that most markets are close to the levels of support, formed in the side-wide trend (for the MICEX, he is 950 points for RTS - 940 for SP500 - 890 points). Of Perforation of these levels down will increase sales on the Russian site.

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By 14:53 Moscow time the MICEX index falls to 2.1% value of 956.56 r.Maksimalnoe decline observed in the oil and gas sector (-2.3%), less than the rest falling steel sector (-1%).
index of large capitalization falls by 1.98%, the average market capitalization - on 1,62%, a small market capitalization - on 1,38%.

The head of Russia Ministry of Economic Development E. Nabiullina said that the margin of banks should not exceed 3%. This means that the program on small business lending the money, provided through GC Vnesheconombank under 10,5-10,7% per annum shall extend to small business is not more expensive than a 14% per annum.

Rating agency Moody's downgraded the ratings of financial stability subsidiaries OAO Bank VTB: VTB Bank (Austria), VTB Bank (France) and VTB Capital. Prognosis negative ratings.

Bank of Moscow has raised rates on deposits within 1%.

OAO Rosbank also increased interest rates on deposits up to 2%.

The August crude oil futures traded on the NYMEX, falling to 0.32%, trading at 66.52 U.S. $ /barrel. September futures for the SP 500 index, traded on the CME, in the black at 0.11% and traded at U.S. $ 894.25

The sharp fall in prices of oil futures over the past 3 days with 73doll./barrel to 67doll./barrel, ie more than 8% led to a sale on the Russian stock market. In general, the level of oil prices today could be called comfortable for domestic oil companies. When you save the current price levels in the Russian oil market has sufficient growth potential to halt its downturn.

By the end of trading session, a further reduction in the MICEX Index considers it unlikely.

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On the market today, there is inactive during sadness, but the negative tone raised yesterday falling, continues to push the prices of shares. By mid-trading session, all blue chips are in negative zone, the decline was on low volumes.

Today is not expected to release any meaningful statistics, and the western United States in the bidding shall not be held prior to the Independence Day holiday, so negative since yesterday after the fall of the western stock indices and the reduction in oil prices will continue to shape the dynamics of our market today. Guide will likely serve as the movement of oil prices.

Obscherynochnaya dynamics can be seen at the given day schedule MICEX index. In the medium term, the market remains in a bear phase. This is evident in the fact that the index is still trading below the downward trend (red line on the graph). While the situation remains unchanged, medium-term thinking about the opening of long positions prematurely. Only overcome the aforementioned trendline price up will signal the end of the downward momentum.

short, we are in a period of decline, and the use of short positions may be useful to the last two days to get a good return on shares of major decline, especially if the trend continues today.

At the time of writing the commentary better show a stock market Lukoil (-0.7%) and PolyusZoloto (0.2%). As outsiders Rusgidro (-3.6%) and prefy Sberbank (-3.5%).

RTS stands at 948 points, to 1.2 percent below the closing on Thursday.

It is possible that today we see a gradual decline in the shares, which will, as well as in the morning to go to low volumes. With such developments, the decline may continue and at the beginning of next week as well cause the failure indices for the previous minima in the region of 900 points for the indexes MICEX and RTS. However, possible and return to yesterday's levels, that only confirms the full uncertainty in the moods of market participants.

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Today's the beginning of the trading on the Russian stock market, despite the negative external environment, it was optimistic, with some 0,5 -%-ing a gap up on the main indices on Russia yesterday's closing values. During the first minutes of trades increased optimism of investors, but with the opening of European stock pads on the market mood has changed for the worse. At the moment, the main Russian blue chips on yesterday's closing trading in the red. As of 12:34 Moscow time the main indicators of the Russian market, the MICEX and RTS indexes are in negative zone, losing, respectively, 1.5% (962.2 forth), and 1.36% (947.34) are . Yesterday's trading ended on the ocean sharp decline. At the end of the trading, Dow Jones, in response to the negative macroeconomic statistics (dismal data from the labor market), fell to 2.626%, to close at 8,280.74 point p, a broad market indicator S P500 lost 2.914%, while its value on the closure of 896.42 Point Dynamics futures index data, is an indicator of investor sentiment at the opening of the American market at this time is neutral. Current value on the Dow futures are in contango total of 7 points or 0.08%. Let me remind you, yesterday became aware of an increase in unemployment in the United States as a result of last week to a record over the past 26 years of values. Despite the fact that these figures were quite expected by analysts, much worse than forecasts proved only a reduction in the number of jobs in non-agricultural sectors, traders took this very negative macroeconomic statistics.

Quotations black gold in response to the negative sentiment in financial markets continued to be corrected with marks above 70 U.S. $ /bbl, reflecting a decrease in speculative demand of raw material, which is the sole reason for the persistence of high oil prices in a global recession. Thus, the current values of oil futures to near ekspiratsiey of Brent-WTI and have already represent, respectively, 66.70 U.S. $ /bbl and U.S. $ 66.74 /barrel, about U.S. $ 1.2 lower than yesterday's values.

protecting the market of raw materials from another scale capable of reducing only excess monetary liquidity, whipped inflationary measures supporting the economic growth of the developed countries, which sent investors to the markets, which are traditionally protected from inflation: the oil futures markets and developing countries.

With regard to quotations of Russian blue chips, then at 12:11 Moscow time the major Russian blue chips continue to decrease. For example, shares of Lukoil lost 0.62% (1316 EUR), MMC Norilsk Nickel 3.49% (EUR 2770), Rosneft 1.72% (165.01 EUR), Surgutneftegaz 1,12 % (21.27 USD), Gazprom 1.81% (154.80 EUR), VTB 2.80% (0.0347 USD), Sberbank of 3.09% (36.70 EUR).

Despite the lack of bidding today for the ocean (in the United States today, day off), the trading activity on the Russian stock market is quite high: investors prefer to sell desheveyuschie Russian equities.

Among the most important news today is worth noting the preservation of the ECB rate for the same level (1%) and negative reporting AVTOVAZ.

Maintaining the basic interest rate at 1.0% would, in the opinion of the ECB to stimulate economic growth in the medium term without the threat of the sharp increase in inflation. Also, we note the ECB's willingness to quickly absorb the previously liquidity to the extent of improving the economic situation in order to reduce inflationary pressures in the future. Inflationary pressures in the euro area economy continues to decline. In particular, the May inflation rate was 0.0% in June, according to preliminary estimates, there was deflation at -0.1%. According to the ECB, deflation is due to the high base effect, which is linked to the high prices of resources a year ago. In the next few months, deflation may persist. In the medium term inflation target remains at 2%, so as to improve the macroeconomic situation, the ECB is ready to quickly absorb the previously provided liquidity.

Currency market reacted negatively to the ECB's forecast chapter of the weakness of European economies in the near future. We note that the actions of the ECB is still more conservative in comparison with the actions taken by other major central banks in the world. On the one hand, this may slightly delay the process of rebuilding the economy, but on the other hand, corresponds to the lower inflation risks, with a positive for the economy of the euro in the long run. Also, we note the willingness of the ECB quickly absorb liquidity, as improved economic conditions in order to prevent inflation in the future.

published statements on the basis of AvtoVAZ in 2008 is the expected negative and reflects the sharp decline in sales in the 4 th quarter, as well as significant increases in the price of steel in the first half. Also on the profitability of the company affecting the sharp increase in administrative costs. We expect that due to a sharp fall in sales and the high cost of raw materials and supplies company, on the basis of 2009 will be, with high probability, loss. We appreciate the reporting AvtoVAZ-up in 2008 as expected negative. Due to rising prices for steel and components, production costs rose faster than revenues. As a result, gross profit decreased by 39% to $ 699 million other negative developments in 2008 was the lack of control over the increase in administrative costs, resulting in an increase of 25.3%. Cost of sales also increased significantly - by almost 29%. According to our estimates, in 2009 at AvtoVAZ is likely to get a loss. Manufacturing Company in January-May 2009 fell by 67% compared to same period last year. In addition, the management of AvtoVAZ reported that in the first half of 2009, the cost of raw materials is not reduced in comparison with the second half of 2008. According to management, a loss of 1 half of 2009 amounted to about 10 billion rubles (about $ 323 million).

As regards the situation as a whole in the market, then at this point, we believe the likelihood of continuation of correction is high. At the moment, with the segment of blue chips, we see a prerequisite for development of short-term rising trend in shares of Gazprom, RusGidro and Tatneft. As for other blue chip, we continue to recommend that the monetary stance.

We still recommend that you stay out of the speculative long positions on the most liquid Russian shares in terms of increased market volatility. With respect to the shares of the second tier, in this segment, we also recommend that you lock in the profits of Peak, rampant and Severstal, increasing the amount of cash position in the segment. In doing so, we are still retains a positive view of the long-term prospects for shares in companies small and medium-capitalization, with a stable business model and a low debt load and recommend to hold the position long-term data on shares of issuers in the portfolio.

Among them we note the action Kuzbassrazrezuglya, Bamtonnelstroya, IDC Holding, Akron and prefy sylvinite.

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