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Medium-term buyers have not yet returned to ALROSA shares

The Russian stock market did not show a single dynamics by the middle of the day, feeling the influence of a strong ruble and sanctions pressure. By 14.05 Moscow time, the Moscow Exchange index fell by 0.6%, to 2402.62 points, while the dollar index increased by 0.35%, to 1433.03 points, having updated another maximum since February 18. The G-7 summit confirms the earlier news about the ban on Russian imports and the setting of a price limit for oil imported from the Russian Federation.

The ruble on the Mosbirzhe strengthened within 1% against the dollar and, being at 52.90 rubles. and 55.70 rubles. respectively. At Forex, the Russian one grew by 0.5-4%, showing more confident dynamics against the euro and striving for recent peaks since 2015 of 51.75 rubles. and 55.50 rubles. respectively.

Issuers

The largest growth by the middle of the session was shown by ordinary shares of Surgutneftegaz (MCX:) (+4.76%), GDR TCS Group (+4.13%), ordinary shares of Rostelecom (MCX:) (+3.90%), ordinary shares of Mechel (MCX:) (+3.64%), Aeroflot (MCX:) (+3.44%) and LSR (MCX:) (+2.82%).

The decline leaders were Petropavlovsk (-4.59%), ALROSA (-4.42%), Sovcomflot (MCX:) (-3.57%), RusAgro (-2.95%) shares.

Not too optimistic news comes through ALROSA about difficulties with paying for Russian diamonds, as well as a slowdown in their trade. Thus, the net import of diamonds to India in May was 36% lower than the average level for this month, and it can be assumed that the falling volumes fell on the Russian Federation due to the loading of foreign diamond companies at full capacity. In addition, during the meeting of the Kimberley Process, the issue of recognizing Russian diamonds as “blood” diamonds was raised, by analogy with stones from disadvantaged African countries. If this happens, then the reorientation to Asia will become problematic for ALROSA.

From a technical point of view, ALROSA shares on Tuesday are retreating from the medium-term downtrend line and the upper Bollinger band of the daily chart (76 rubles area) with the predominance of short-term bullish movement on the ADX indicator. So far, there are no signals to build up short-term “long” positions on securities, and at current levels it makes more sense to fix at least a part of short-term profit. Fixing below the support of 70 rubles. (also the middle Bollinger band of the daily chart) will indicate the risks of developing a downward movement and updating the June low of 65 rubles.

External background: moderately positive

European exchanges: positive attitude. The index added about 1% by the middle of the session, remaining in a corrective mood, despite the data on a further deterioration in the consumer climate in Germany, as well as statements by the head of the ECB, Lagarde, about the possible use of a more aggressive monetary policy if necessary.

oil market: positive attitude. The nearest futures on and by the middle of the day accelerated the increase and added about 2%, tending to the nearest resistances of 117.50 dollars and 112 dollars, respectively, after the confirmation of the G7 plans to limit the prices of Russian oil. The specific mechanism of restriction is yet to be worked out. In addition, options are being considered to ban the transportation of Russian oil by sea. Quotes continue to move higher amid continued risks of a more limited supply, which have intensified against the backdrop of production disruptions in Libya and Ecuador due to political tensions.

US exchanges: moderately positive attitude. by the middle of the session in the Russian Federation added about 0.5%, foreshadowing the next approach of the indicator to the short-term resistance of 3940 points. The market may move towards consolidation ahead of more important macro signals as the week progresses, with Tuesday’s data likely to show a decline in US consumer confidence in June.

Sobtija of the day:

US consumer confidence index in June (17.00 Moscow time)

ECB financial forum

Speeches by representatives of the ECB and the Fed (during the day)

G7 summit

Market inside the day

General mood: Purchases remained on foreign stock markets on Tuesday due to the desire of investors to take the indices away from local lows and short-term adaptation to the prospect of tightening monetary conditions. and RTS did not show significant changes before summing up the results of the G7 summit and the official announcement of new sanctions against Russian gold and oil, which in the short term have largely been taken into account by the market, but in the medium term will put pressure on sentiment. At the same time, there are no plans to impose restrictions on the import of agricultural products from the Russian Federation – positive news for the sector.

About author

Oxford graduate with honors. He worked in large financial projects for well-known Wall Street corporations. After he earned his first capital and a reputation as a successful trader, he opened his own company. At the moment, the growth of the company's capital is 20% per year.
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