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Russia RTS Index Futures Gain as Commodities Rise, Dollar Drops

Russia’s RTS stock-index futures gained after commodities rose and the dollar dropped against the euro, fueling demand for alternative investments.

Futures on the dollar-denominated index expiring in June rose 0.9 percent yesterday, signaling benchmark indexes may rebound in Moscow after the Micex index of 30 stocks closed at its lowest level in five months on May 12. Contracts on OAO Rosneft, the country’s biggest oil producer, gained 0.9 percent while those on OAO Lukoil, Russia’s second-biggest, rose 0.7 percent. OAO Gazprom, the world’s biggest gas producer, rose 1 percent.

“RTS stock-index futures turned higher as key commodities rose after the dollar gave back gains,” Yan Gloukhovski, a trader at Alforma Capital Markets, the New York branch of Russia’s Alfa Bank, said via e-mail. “The structure of the rebound is likely to favor domestic names in steel, retailers and financials.”

The U.S. currency slipped from the highest level versus the euro since April 1. Some investors buy oil and other commodities when the dollar weakens against the euro and sell them when the dollar strengthens. Oil retreated earlier when the International Energy Agency cut its global demand estimate for this year by 190,000 barrels a day, or 0.2 percent.

The Thomson Reuters/Jefferies CRB Index of 19 raw materials rose 0.1 percent yesterday. The index rebounded after dropping 9 percent last week, the steepest weekly decline since December 2008. Russia is the world’s largest energy exporter and a producer of metals including nickel, palladium and aluminum. Oil and natural gas account for a quarter of Russia’s economic output.

Commodity Volatility

“The extent of volatility in this commodity rout decreased the appetite for the sector and investors are likely to have a more defensive stance into the summer,” Gloukhovski said.

Crude oil for June delivery rose 0.8 percent, to settle at $98.97 a barrel on the New York Mercantile Exchange yesterday. Prices were up 31 percent from a year ago.

The Market Vectors Russia ETF, a U.S.-traded fund that holds Russian shares, fell 0.2 percent. Lukoil’s American depositary receipts dropped 1.3 percent. Gazprom’s ADRs fell 2.6 percent. OAO GMK Norilsk Nickel’s ADRs rose 1.6 percent.

The S&P 500 Index (SPX) increased 0.5 percent to 1,348.65 after dropping as much as 0.8 percent to 1,332.03. The Dow Jones Industrial Average also gained 0.5 percent to 12,695.92, rebounding from a 0.7 percent loss earlier.

The dollar weakened 0.4 percent against the euro to $1.4246 after increasing to $1.4124 earlier. The Dollar Index, which tracks the currency versus six major peers, lost 0.2 percent to reverse an early gain.

Russia’s ruble-denominated Micex Index lost 1.5 percent yesterday, falling to 1,630.78, the weakest level since Dec. 1. The dollar-denominated RTS Index fell 2.3 percent to 1,864.95.

To contact the reporter on this story: Halia Pavliva in New York at hpavliva@bloomberg.net

To contact the editors responsible for this story: Gavin Serkin at gserkin@bloomberg.net; David Papadopoulos at papadopoulos@bloomberg.net

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