Russia Stocks Fluctuate Before Fed Amid New Ukraine TensionKsenia Galouchko
Russian stocks fluctuated after two days of gains amid a new outbreak of conflict in Ukraine and as investors awaited a Federal Reserve decision on whether to further ease monetary stimulus.
The Micex Index rose 0.2 percent to 1,307.77 by 12:10 p.m. in Moscow after falling as much as 0.4 percent earlier. That left the index down 4.5 percent for the month. OAO Magnit, the nation’s biggest retailer, advanced 1.1 percent. The exchange will be closed for a public holiday tomorrow and will re-open on May 2, also a public holiday.
About 20 armed pro-Russian separatists seized a government building and police headquarters in the city of Horlivka in eastern Ukraine, Interfax reported today. U.S. Fed policy makers will probably cut the pace of monthly bond buying to $45 billion at a two-day meeting that concludes today, according to the median of economists’ estimates compiled by Bloomberg.
‘Risks of further escalation in Ukraine are unabated, while the ability to somehow hedge exposure over the May holidays will be fairly limited,’’ Vyacheslav Smolyaninov, a strategist at ZAO UralSib Capital in Moscow, said in e-mailed comments. The Fed decision “is another discomforting factor for speculators to leave positions open ahead of the FOMC announcement,” he said.
Russian stocks gained during the first two days of this week on bets the U.S. and European Union are hesitant to deepen the standoff with President Vladimir Putin after his incursion into Ukraine last month. The latest round of international sanctions bypassed the country’s major companies and banks.
Putin yesterday warned any further economic sanctions may lead Russia to reconsider participation by U.S. and EU companies in its energy and other key industries.
Russia’s dollar-denominated RTS stock index has dropped 20 percent this year, the world’s worst performance, as the Ukraine crisis prompted the worst standoff with the U.S. and its allies since the Cold War. The index fell 0.3 percent today and is down 6.2 percent this month.
Shares on the Micex Index trade at 4.7 times projected 12-month earnings, the cheapest valuation among 21 emerging markets tracked by Bloomberg.