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Sanctions against Russian gold may be softer than expected

External background on Tuesday morning can be called moderately positive. Oil prices continue to increase the day before, and the mood on the world’s stock markets are mostly optimistic. Moody’s announced Russia’s default, while Canada, the US and the UK intend to impose a ban on the import of certain gold products from Russia.

External factors

Trading on the US stock exchanges on Monday, after attempts to grow during the day, ended with a decrease in the three major indices by 0.2-0.7%, led by the high-tech Nasdaq. The market retreated from the area of ​​the first short-term correction targets (in particular, 3940 points for the S&P 500) in anticipation of additional macroeconomic signals. At the same time, Monday’s statistics turned out to be better than expected and showed an increase in orders for durable goods in May by 0.7% m/m, while the index of pending transactions for the sale of houses increased by 0.7% m/m for the same period, reminding investors of the prospect of an increase interest rates in the country.

Futures for the S&P 500 add about 0.5% in the morning, heralding a more profitable day for buyers. Tuesday will be marked, in particular, by the publication of data on consumer confidence for June, which may show a drop in the indicator.

Trading in Europe ended yesterday with an increase in the Euro Stoxx 50 index by 0.1%, which retreated from the highs of the day. Tuesday’s data showed a drop in the Gfk consumer climate index for Germany in July from -26.2 to a record low of -27.4 points. The region is facing an economic and energy crisis that governments will have to deal with in the coming months, if not years.

At the auction in Asia in the morning dominated by positive dynamics. The Japanese Nikkei 225 rose 0.66%. The Australian ASX 200 gained 0.85%. Chinese indices rise within 1%.

Near term futures for Brent and WTI oil are rising by about 1.5% in the morning after rising by almost 2% the day before as part of a recovery from the medium-term uptrend line. Prices have overcome the resistances of $114.50 and $110 respectively and are moving towards the middle Bollinger bands of the daily charts of $117.50 and $115 respectively. Fixing above the latter may further accelerate the rise. The market received an additional impetus to growth after statements by the United Arab Emirates about the lack of additional capacity to increase oil production, as well as news about a possible interruption in supplies from Libya and Ecuador. Saudi Arabia, at the same time, is ready to increase oil production by 150 thousand barrels per day.

Events of the day:

  • speech by ECB President Christine Lagarde (11.00 Moscow time)
  • US consumer confidence index in June (17.00 Moscow time)
  • financial forum of the ECB
  • speeches by representatives of the ECB and the Fed (during the day)
  • G7 summit

Market to open

and rose by about 1% on Monday, having won back the losses of the previous session due to optimism on individual issuers. The Mosbirzhi indicator fixed above the resistance of 2415 points, which indicates the prospect of movement to the 2450 points area, and the RTS index has updated its peak since February 18 and may well aim for the 1500 points area.

The ruble on the eve of the Moscow Exchange strengthened against the dollar and within 0.5%, and this morning at Forex it is weakening against the dollar and growing against the euro, being close to the peaks since 2015 of 51.75 rubles. and 55.50 rubles. respectively. The Russian currency maintains momentum for a slow rise.

At the beginning of the trading day, the Russian market may try to continue its upward movement due to predominantly optimistic sentiment abroad, as well as news about the possibility of softer sanctions against the Russian Federation, which may include a ban on the import of only some gold products from the country. The new restrictions are likely to be announced during the third day of the G7 summit. At the same time, Western sources continue to declare Russia’s default on its obligations, which is a formality and in fact plays practically no role for market sentiment in the context of the general closedness of the national economy.

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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