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News about US sanctions devalues world and Russian markets

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News about US sanctions devalues world and Russian markets
August 02
11:00 2019

Trading on Friday was not very encouraging for the Russian stock market. The session began with a fall. “Blue chips” dropped on the news that America was going to impose new sanctions against the Russian Federation because of the incident a year before. It is about Salisbury, Britain, and security services of Russia that used a chemical poison Novichok there. In the first minute of trading, RTS fell 2 %. The same thing happened to the Moscow Exchange index, which also lost about 2% and could not even keep the level above 2700 points.

At 10 a.m., MICEX Index was at 2696 points, RTS Index -at 1319 points. The main chips lost more than 3%. At the same time, the dollar rose 64.5 rubles.

The House of Representatives of the US Congress previously asked President Trump to start the second stage of sanctions against the Russian Federation. We recall that the reason was the using chemical weapons in a foreign country. The incident occurred last year. Then the Russian agent Sergei Skripal and his daughter were attacked. So, President Trump has signed a decree imposing sanctions.

 Securities of Gazprom Neft, Norilsk Nickel and Rosneft have dropped 0.9%, Sberbank – 3.1%, VTB – 1.8%, Yandex – 2.1%, Aeroflot – 2.7%.

Indices have suffered not only in Russia, but also in the States. The news about the intension of the authorities to introduce regular duties on Chinese exports caused the fall. On Thursday, Trump said that in September, 10% tariffs on goods worth $ 300 billion would be kept. He stressed that it was about the products that previously had not been taxed. The president also recalled that a 25% tariff on products worth $ 250 billion was still in effect.

S&P 500 stock contracts fell 0.2%.

Statistics has also affected US indices. The business activity index, for example, has been declining four times in a row. In July, it decreased by 0.5 points to 51.2 p. This is the lowest figure since the summer of 2016.

Now the market is waiting for the report on the state of the labor market. It will be released on Friday. Forecasts say that the number of jobs will increase about 160 thousand, while unemployment will fall to 3.6%.

Asian indices also do not finish the week positively. Nikkei 225 has lost more than 2%, Shanghai Composite has fallen almost 1.5%.

Oil is adjusting after its biggest drop over 4 years. The news about new duties on Chinese goods has crashed the market significantly.

Brent contracts for October (as of 10 a.m. Moscow time) are trading at $ 61.6 per barrel. September contracts of the American brand are trading at the level of 54.8 US dollars.

Because of Trump’s statements about new duties, concerns about the global economic downturn again become a significant factor, which affects the markets. China’s comments have been soft so far. They noted that the United States did not choose the methods that would help resolve the dispute.

In the near future, the value of quotes will depend directly on the developing relations between the United States and China. Success in negotiations will become a determining factor for the market.

 

The material was prepared with the participation of Katya Wilson,
a leading analyst of the brokerage company UFT Group

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