OAO Mechel led declines in Russian shares traded in New York and OAO Lukoil retreated from a four-month high as oil, the country’s biggest export earner, sank after U.S. budget talks stalled.
American depositary receipts of Mechel, Russia’s largest producer of steelmaking coal, dropped 4.2 percent to $6.62 on Dec. 21, the biggest retreat since Nov. 7. Lukoil, the nation’s second-biggest oil producer, lost 2.3 percent to $65.35. The Bloomberg Russia-US Equity Index of the most-traded Russian companies in the U.S. declined 1.2 percent as futures expiring in March on Russia’s RTS Index added 0.1 percent to 151,920.
Oil, which together with natural gas accounted for half of Russian budget revenue in 2011, fell from the highest level in two months on Dec. 21 after House Republican leaders canceled a vote on higher taxes for top earners. Russia’s benchmark Micex Index is trading at the lowest valuation among 21 emerging markets tracked by Bloomberg as crude is poised for its first annual decline since 2008.
“If the U.S. does fall off the fiscal cliff and this leads to another recession in the U.S., this will drive down energy demand and hurt the Russian economy,” David Riedel, the president of New York-based Riedel Research Group Inc., wrote by e-mail on Dec. 21. “When the political and fiscal outcome in the largest economy in the world is uncertain, people move out of riskier assets and specifically equities in countries like Russia, which are seen as among the riskiest of the emerging markets.”
The Bloomberg Russia-US measure declined to 97.49 on Dec. 21, trimming its advance last week to 0.3 percent. The Market Vectors Russia ETF, the biggest U.S.-traded exchange-traded fund that holds Russian shares, decreased 1.4 percent to $29.55, reducing its gain last week to 0.9 percent. The RTS Volatility Index, which measures expected swings in the index futures, dropped 1.5 percent to 20.42.
The Congressional Budget Office has forecast the U.S. would tip into recession if the slashed spending and higher taxes for all earners goes into effect.
Lukoil, Russia’s second-biggest producer after OAO Rosneft, fell 2.3 percent to $65.35 in New York on Dec. 21. The Moscow-based company slipped 0.7 percent to 2,022.9 rubles, or the equivalent of $65.61.
ADRs of Mechel plunged 4.2 percent to $6.62 on Dec. 21, making it the biggest decliner on the Bloomberg Russia-U.S. gauge. Mechel lost 2.5 percent in New York last week. Shares of the Moscow-based company fell 1.4 percent to 206.4 rubles, or $6.69, on the Micex on Dec. 21.
OAO Gazprom, Russia’s biggest company, added 0.7 percent to $9.42 on Dec. 21 for a weekly gain of 4.8 percent, the steepest since the five days to Sept. 14. Its 100-day volatility dropped to 27.11 on Dec. 19, the lowest reading since Jan. 25, 2011.
The Moscow-based company’s gas output reached a record high on Dec. 20 as exports to Europe was 17 percent higher than planned in December due to cold weather, Chief Executive officer Alexei Miller said in Brussels on Dec. 21.
Polyus Gold International Ltd. gained 0.5 percent to $3.29 in New York on Dec. 21, settling at a 2.3 discount to the company’s London-listed shares. In London, the stock climbed 1.6 percent to 208 pence, or $3.36, while it fell 0.3 percent to 904.4 rubles, or $29.33, in Moscow.
Gold futures for February delivery advanced 0.9 percent to $1,660.1 an ounce on the Comex in New York on Dec. 21.
United Co. Rusal, the world’s largest aluminum producer, added 0.2 percent to HK$4.90 in Hong Kong trading as of 11:48 a.m. local time.
Crude for February delivery fell 1.6 percent to $88.66 a barrel on the New York Mercantile Exchange on Dec. 21. Prices are down 10 percent this year. Brent oil for February settlement slid 1.1 percent to $108.97 a barrel on the London-based ICE Futures Europe exchange, while Urals crude, Russia’s chief export blend, declined 0.8 percent to $108.65.
The Standard & Poor’s GSCI gauge of 24 commodities dropped 0.7 percent to 639.09 on Dec. 21. Ruble futures showed the currency weakening 0.5 percent to 31.255 per dollar on Dec. 21. The ruble fell 0.6 percent to 30.8375 per dollar in Moscow at the end of last week.