The actions of the Central Bank of China to increase liquidity supported the mood on the global markets. European markets bounced after the recent fall: STOXX 600 gained 1.3%, DAX climbed 1.7%, FTSE 100 added 1.3%. American securities opened with growth and continued to gain throughout the session, while any local drawdowns were bought out. The S&P showed an increase of 1.13%, by the close, having updated its all-time high, the Nasdaq rose by 0.98%. All 11 sectors of the S&P ended the day in positive territory, with the oil and gas and financial sectors leading the way.
Brent crude oil returned to the level of $ 75 per barrel, having risen in price for the day by 1.9% and closed at $ 75.55.
The RTS index climbed 0.5%, while the Moscow Exchange retreated 0.15%, lagging behind other European markets. The ruble gained 35 kopecks against the US dollar to close at 74.30.
- Gazprom increased by 0.9%, continuing to test the level of 295 rubles. The rest of the oil and gas companies were under pressure: NOVATEK -1.5%, LUKOIL -0.6%, Rosneft -0.7%.
- Banks traded in different directions: Sberbank has risen in price by 0.3%, VTB added 0.8%, and TCS Group corrected by 0.9%.
- The metallurgical sector has become one of the growth leaders: Norilsk Nickel + 1%, RUSAL + 1.3%, Severstal + 4%, NLMK + 3.3%, MMK + 3.8%, Evraz jumped 5.5%.
- ALROSA rose 2.3% after posting strong June sales.
- IT companies lagged behind market dynamics: Yandex. dropped by 2.7%, Mail.ru Group fell in price by 1.3%.
We expect the market to open today unchanged.
ALROSA: JUNE DIAMOND SALES AMOUNTED TO $ 410 MLN (ALRS RX; NEUTRAL)
Sales of rough diamonds in June amounted to $ 374 million (+ 8% mom), and polished diamonds – $ 36 million (+ 90% mom). The company remains optimistic about the market outlook with strong jewelery demand in all key regions. ALROSA said that the reserves of mining companies have reached their minimum due to the structural decline in production at a number of assets, therefore the company believes that the market is entering a period of a prolonged supply shortage.
Our opinion. Overall sales of rough and polished diamonds by ALROSA in June increased by 12% compared to May amid strong demand and exceeded the pre-pandemic averages for June in 2017-19 by 26%. ALROSA trades at a 2021E EV / EBITDA consensus multiple of 6.7x versus its own 5-year average of 5.6x.