RTS Futures Decline on Global Economy Concern: Russia Overnight
Russia’s RTS stock-index futures dropped, indicating shares in Moscow may fall for a third trading day, amid concern slowing growth in the U.S. and China and Europe’s debt woes will spark a global recession.
Futures on the dollar-denominated index expiring in September declined 0.5 percent to 158,260 yesterday, the lowest close in more than a week. Moscow’s 30-stock Micex Index (INDEXCF) dropped 1.5 percent to 1,492.83, as Urals crude, the country’s chief export oil blend, tumbled the most in four weeks. The gauge may slide 1 percent at the start of trading today, according to Alfa Bank. Asian stocks and U.S. futures fell.
Futures contracts on OAO Gazprom, the world’s largest gas producer, slipped 0.2 percent and those for OAO Uralkali (URKA), Russia’s biggest potash producer, dropped 0.6 percent. United Co. Rusal, the world’s largest aluminum producer, sank 2.1 percent in Hong Kong trading.
A government report showing U.S. payrolls unexpectedly stagnated in August has spurred speculation the Federal Reserve will take action to bolster the world’s largest economy beyond its Aug. 9 pledge to hold rates at record lows through mid-2013. A Chinese services index fell to a record low last month, adding to evidence that country’s economy is slowing. China may report this week industrial production for August slowed from a year ago, according to economists’ forecasts.
“Investors continue to view Russia as a derivative play on the strength of global economic growth,” Chris Weafer, chief strategist at Troika Dialog in Moscow, said by e-mail. The drivers will include “how confident investors are that the Fed will come up with additional stimulus and China’s macroeconomic report for August later this week.”
The RTS Volatility Index, which measures expected swings in the index futures, rose 5.4 percent to 51.14 points yesterday. One index point equals $20. The RTS index slipped 0.2 percent to 1,614 in Moscow, the lowest close in a week. The Stoxx Europe 600 Index lost 4.1 percent to 223.45 yesterday, posting its biggest two-day drop since March 2009, while the Standard & Poor’s 500 Index futures retreated 2 percent. The U.S. stock markets were closed yesterday for the Labor Day holiday.
A second day has been added to the Fed’s meeting this month to “allow a fuller discussion” of the economy and policy options, Fed Chairman Ben S. Bernanke said in a speech on Aug. 26. Payrolls in the U.S. were unchanged last month, after adding 85,000 in July, and the unemployment rate held at 9.1 percent, the Labor Department said on Sept. 2.
European services and manufacturing growth weakened in August, with a composite index based on a survey of euro-area purchasing managers in both industries dropping to 50.7 from 51.1 in July, Markit Economics said yesterday. A figure above 50 indicates growth. Retail sales in the 17-nation euro region unexpectedly advanced 0.2 percent in July from the previous month, when they rose 0.7 percent, the European Union’s statistics office in Luxembourg said the same day.
Italy Austerity Debate
Italian bonds plunged for the 11th day yesterday amid concern the government may backslide on its austerity package announced on Aug. 5. The nation’s Senate will begin a debate today on the 45.5 billion-euro ($64 billion) plan just as CGIL, Italy’s biggest union, holds a strike across the country against the measures. The government agreed last week to drop spending cuts and tax increases from the plan.
“Euro crisis is back in the spotlight,” Luis Saenz, chief executive officer of the U.S. unit of Moscow-based brokerage Otkritie Financial Corp., wrote in an e-mail note. “European PMI and retails sales are unlikely to lift the mood.”
Urals crude declined 2 percent, the steepest slump since Aug. 8, while crude for October delivery sank 3.3 percent to $83.60 a barrel on the New York Mercantile Exchange. Energy sales contribute as much as 40 percent of Russian government revenue and 17 percent of gross domestic product, Finance Minister Alexei Kudrin said in June.
Consumer prices in Russia rose 8.2 percent from a year earlier last month, the slowest pace since November, the Federal Statistics Service in Moscow said yesterday. Bank Rossii will hold its refinancing rate at 8.25 percent after increases in February and April, according to all 22 economists in a Bloomberg survey. The central bank may meet this week.
The Micex has slumped 12 percent this year and trades at 5.8 times analysts’ earnings estimates. That compares with a 14 percent decline in the MSCI Emerging-Markets index, which trades at 10.5 times profits.
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