Markets are flat in anticipation of Biden’s “trillions”

The scenario of trading on the Russian stock market repeated itself yesterday: growth at the opening and a very smooth subsequent slide down. By the end of the main session, the Moscow Exchange Index remained practically unchanged.

The leaders of growth yesterday were shares of “Mechel”. But as is often the case in recent months, the rise in quotes occurred without any news. Therefore, it is difficult to judge whether the securities will continue to rise, and if so, to what point. However, usually the growth lasts for a couple of days, and then spreads to the subsidiaries of the company.

Rosneft shares added about 2.5%. Their rise can be explained by expensive oil and the fact that the company will benefit from an increase in oil production quotas. But this fact was known last week. So we do not recommend joining growth, and aggressive investors, on the contrary, should look for a moment to open shorts at the first signs of a reversal in the security. But it will hardly be possible to catch more than a percent or two: the markets have no intention of correcting yet.

Sberbank lost just over 2% in capitalization. Perhaps these are the first signs of profit fixation by non-residents on Russian shares.

On the whole, both the Russian and the American stock markets have fallen into a flat, where they are trying to remove the technical overbought. Joe Biden can bring them out of this state if, as experts expect, he will tell about his plans to support the country’s economy with “trillions of dollars” in the near future. If trillions are not enough, and Biden disappoints players, then the markets will go into a shallow correction.

In general, the scenario of a decline is the most probable in the near future, so new purchases should be made only pointwise and speculatively.

An increase in the desire to take profit is also indicated by the dynamics of shares of the Moscow Exchange itself, which added a little less than a percent yesterday. Recently, we often see the growth of securities of this issuer in a declining market.

In the morning, the external background was neutral: American futures were growing weakly, oil prices dropped slightly. So the opening will be neutral, after which it is possible that a gradual decline will resume if the external background does not begin to improve.

The ruble in pairing with the dollar tried to strengthen yesterday, but at the close of global trading again moved closer to the level of 74. A little higher technical resistance is forming for the dollar-ruble pair, a breakdown of which will open the way for the pair to the level of 76.

The market reacted negatively to the decision of the Ministry of Finance after many months to resume the purchase of foreign currency within the framework of the budget rule. From January 15 to February 4, the Central Bank will daily purchase the equivalent of 7.1 billion rubles for the financial department, while earlier every day the volume of support for the ruble was 2.2 billion rubles in currency equivalent.

The volume of purchases is small relative to trade turnover. But one gets the impression that large exporters have again begun to hold back the currency and not sell it on the Moscow Stock Exchange in the hope of a depreciation of the ruble. At least in recent days, we have not seen any increase in the supply of dollars and euros. Meanwhile, the exporters have accumulated currency during the long New Year holidays.

In such conditions, there are not many chances for the strengthening of the ruble, we recommend preparing for the next wave of devaluation of the “Russian”.

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