Russian Stocks Climb to Fresh Record as Ruble Gains on Oil, Fed

(Bloomberg – bloomberg.com – Ksenia Galouchko – September 5, 2016)

Russian stocks climbed to a record for the second day in a row and the ruble rallied with bonds as oil advanced and investors speculated U.S. rates will stay low, fueling demand for higher-yielding assets.

The Micex Index closed up 0.7 percent to 2,017.38 after piercing the 2,000-point level for the first time on Friday. The Russian currency edged 0.1 percent higher to 65.01 per dollar by 7:25 p.m. in Moscow, its second day of gains. Five-year ruble yields fell for the fifth day, the longest winning streak since May. Oil, Russia’s key export earner, rose 1.4 percent to $47.47 a barrel.

U.S. payrolls data on Friday missed expectations, fueling bets the Federal Reserve will keep interest rates lower for longer and fanning the global hunt for returns in riskier developing nations. Brent pared some of its gains as talks between Russia and Saudi Arabia over ways of stabilizing the crude market fell short of a freeze on output. OPEC nations and other oil producers meet for talks in Algiers later this month.

“The positive news began on Friday with the weak U.S. data, when investors became confident that the Fed won’t hike rates in September,” said Denis Davydov, an analyst at Nordea Bank in Moscow. “The OPEC meeting may bring the stabilization of the oil price, although there isn’t much room for the oil to rise from current levels.”

Davydov says he expects the ruble to trade at about 65 against the dollar this week.

While the Micex traded stronger for a second day, the gauge’s relative strength index stands at 67.7, short of the 70 level that signals to some investors that the rally may be nearing an end. The RSI hasn’t breached that level since March, data compiled by Bloomberg show.

Article ©2016 Bloomberg L.P. All Rights Reserved. Article also appeared at 
bloomberg.com/news/articles/2016-09-05/russian-stocks-trade-near-record-as-ruble-advances-on-oil-fed