RTS Futures Retreat as Lukoil Plunges: Russia Overnight
Futures on Russian equities declined 0.2 percent to 150,930 on Sept. 21. The Bloomberg Russia-US Equity Index (RUS14BN) of the most- traded Russian companies in New York rose 0.4 percent to 100.63, paring the biggest weekly retreat since the five days ended May 18. Lukoil sank 4.9 percent to $62.66 as OAO Gazprom (OGZPY), Russia’s state-controlled natural gas exporter, posted the biggest weekly drop in four months.
Oil, which together with natural gas accounted for half of Russia’s budget revenue in 2011, fell 6.2 percent last week, the largest weekly slump since the five days to June 1. The Standard & Poor’s GSCI Spot Index of 24 commodities retreated for the first time in eight weeks, losing 4.4 percent. Global slowdown concerns mounted last week after more Americans than forecast filed unemployment claims and manufacturing in China and Europe slowed. The European Union is Russia’s biggest trading partner.
“Oil is down on an ongoing concern over major consumer economies, including China, Europe and the U.S.,” Ian Hague, the founding partner at Firebird Management LLC, which manages $1.3 billion in assets, said in a phone interview from New York on Sept. 21. “Oil affects Russia through the mechanism of the budget and a decline in Russian equities is a reflex of a drop in oil prices.”
The Market Vectors Russia ETF (RSX), the biggest U.S.-traded exchange-traded fund that holds Russian shares, fell 0.2 percent to $29.73 on Sept. 21. The RTS Volatility Index retreated 3.1 percent to 30.29.
Gazprom lost 0.2 percent to $10.49 in New York, extending its decline to 6.3 percent last week, the biggest drop since the five days to May 18. Gazprom, the nation’s biggest company, fell 0.6 percent to 163.83 rubles, or $5.28, on the Micex on Sept. 21. One Gazprom ADR is equal to two ordinary shares.
Lukoil lost 1 percent to 1,945.80 rubles, or $62.73, in Moscow on Sept. 21, dropping 3.5 percent from the previous week in the largest drop since the five days to May 18. One share equals one ADR.
Oil futures on the New York Mercantile Exchange sank 1 percent to $91.97 a barrel in electronic trading as of 11:07 a.m. Hong Kong time today. Prices are down 6.9 percent this year. Crude may decline this week after data from Asia, Europe and North America bolstered concern that global economic growth is slowing, a Bloomberg survey showed.
Thirteen of 27 analysts, or 48 percent, forecast crude will decrease through Sept. 28. Seven respondents, or 26 percent, predicted that futures will gain and seven said there will be little change in prices. The survey has correctly predicted the direction of futures 50 percent of the time since its start in April 2004.
A Chinese manufacturing survey on Sept. 20 pointed to an 11th month of contraction and Japan’s exports slipped in August. A report showed euro-area services and industrial output fell to a 39-month low in September.
U.S. Labor Department figures on Sept. 20 showed American jobless claims decreased by 3,000 in the week ended Sept. 15 to 382,000. That was above the median forecast of 375,000 projected by 49 economists surveyed by Bloomberg.
Brent oil for November settlement climbed 1.3 percent to $111.42 a barrel on the London-based ICE Futures Europe exchange, losing 4.5 percent from the previous week. Urals crude, Russia’s chief export blend, gained 1 percent to $110.15 a barrel on Sept. 21, reducing a drop last week to 4.2 percent.
‘Commodities as Hedges’
The Federal Reserve announced on Sept. 13 that it would make additional purchases of debt in a third round of so-called quantitative easing. The move followed a European Central Bank bond-buying announcement on Sept. 6.
“QE3 and the similar exercise in Europe caused investors to look more closely at commodities as hedges against inflation,” Hague said by phone on Sept. 21 “However, there is no evidence of inflation yet.”
OAO Surgutneftegas (SGTPY), Russia’s fourth-largest oil producer after OAO Rosneft, OAO Lukoil and BP Plc (BP/)’s Russian subsidiary TNK-BP, rose 4.2 percent to $6.67 on Sept. 21, paring a second consecutive weekly drop. In Moscow, the stock retreated 2.6 percent to 28.568 rubles, or 92 U.S. cents. One ADR equals 10 common shares.
American depositary receipts of OAO Mechel (MTL), Russia’s biggest producer of coal for steelmakers, fell 1.2 percent to $7.47 in New York, swelling the weekly drop to 5.9 percent. The ADRs settled at a 3 percent discount versus the company’s Moscow shares, the most since Aug. 28. The Moscow stock surged 4 percent to 238.90 rubles, or $7.73.
United Co. Rusal, the world’s largest aluminum producer, rose 0.2 percent to HK$4.52 in Hong Kong trading today. The MSCI Asia Pacific Index (MXAP) sank 0.6 percent amid concern discord among European leaders will hinder resolution to the region’s debt crisis.
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