Ruble
Mikhail Vasiliev, chief analyst at Sovcombank:
“We believe that the ruble exchange rate may weaken moderately in the coming week after the end of the June fiscal period. The expected trading ranges are 11.4-12.2 rubles per yuan, 84-90 rubles per dollar, 91-97 rubles per yuan per euro.
The June tax period, when exporters are actively selling foreign currency to pay the budget, ended last week, and the ruble lost this support factor by the last week of July.
The Russian currency market is gradually adapting to Western sanctions against the Moscow Stock Exchange and the absence of foreign exchange operations in dollars and euros. Therefore, we expect a decrease in the volatility of the ruble exchange rate in the coming weeks.
The ruble is still supported by high oil prices and a trade surplus, the mandatory sale of foreign currency earnings for the largest exporters, a decline in imports due to problems with payments with friendly countries due to Western sanctions, sales of yuan from reserves as part of budgetary operations, and high ruble interest rates.
Negative factors for the ruble are the seasonal increase in demand for currency since May, including summer holidays abroad, increased geopolitical and sanctions risks, capital outflows, demand for currency to buy shares of Russian companies to foreign owners, increasing budget expenditures, which, among other things, are even used to purchase imports.”
Oil
Vladimir Evstifeev, head of the analytical department of Zenit Bank:
“The correction in the oil market at the beginning of the week did not continue, which confirms the readiness of oil prices to continue to rise. The risk of supply disruptions to the global oil market overshadows other negative factors for the market. Investors fear that the expansion of the conflict in the Middle East will lead to the involvement of more countries in it, which could reduce the supply of oil on the world market.
Prices were also supported by higher expectations that the US Federal Reserve will ease monetary policy at its September meeting. The futures market estimates that the probability of a fall is greater than 60%. The strength of the rising trend was also confirmed by the muted market reaction to weak US industrial data. Commercial oil inventories increased markedly during the week, contrary to expectations of their decrease; Gasoline and distillate inventories increased more than expected.
The short-term outlook for the oil market looks rather neutral. Geopolitics supports the price level, but there are no reasons for reaching the level of $90 per barrel of Brent. Against this background, we expect a consolidation of quotes in the range of $84-87 per barrel.
Exchange
Alexander Bakhtin, investment strategist at BCS World of Investments:
“Over the past week, the Russian stock market made recovery attempts, which were slowed by the monetary factor. The strengthening of the ruble cooled demand for shares of exporters, which occupy more than 50% of the Moscow Stock Exchange index. recent release on accelerating inflation increased the likelihood of a key rate hike at the next meeting. The Central Bank did not add optimism to buyers and the latest threats of sanctions from the West.
However, the benchmark index reached the middle of the range of 3000-3300 points. Stock market bulls are helped by the situation in the commodities market. Oil prices remain stable above $80 per barrel Brent. Mixed signals from the Middle East region and the peak driving season in the United States are driving up the price of “black gold.”
At current levels, many Russian stocks are attractive for long-term purchases. According to our estimates, in a 12-month horizon the Moscow Stock Exchange index could reach 3,800 points. And next week we can expect progress towards the round target of 3200 points. This could be facilitated by the weakening of the ruble, both in the context of the end of the tax period and in light of the measures recently taken by the authorities to bring the ruble exchange rate to economically justified levels.
In addition to the dynamics of the ruble and oil prices, trading participants will follow corporate news, signals from regulators, key statistical data and publications. The Moscow Stock Exchange will reveal trading volumes for June 2024 on Tuesday. In China, the eurozone and the United States, PMI indices for manufacturing business activity (Monday) and services (Wednesday) will be published next week. On Tuesday, investors will pay attention to the preliminary eurozone consumer price index (CPI) and the number of open vacancies in the US labor market (JOLTS) for May. On Thursday, the ECB will publish the minutes of the latest monetary policy meeting, the next day the Federal Reserve will publish a monetary policy report. “On Friday there will be a report on the US labor market for last month.”
