Market Watch November 21: No trading halts and a dead cat bounce
The late sell off on Wall Street on Thursday didn’t translate into a massive sell off in Asian trade on Friday. It translated in the expectation that with things so bad, governments will simply have to make further moves, and quickly, to avoid a complete economic meltdown engulfing the global economy. That’s after the bailouts, rate cuts, debt provisions, and fiscal stimuli already unveiled. Tokyo managed to gain 2.7%, after plunging in early trade, despite the sell off on the back of some short covering, with exporters picking up. Hong Kong gained 2.9% in anticipation of another rate cut in China, and in Australia the trend continued with an early plunge followed by a resources led recovery which saw a 1.9% gain by the close of trade.
Oil managed a minor bounce in Asian trade, which flowed through to Russian and European trade, with metals also getting some minor support. That saw the RTS and Micex jump out of the starting box with vigour before easing south through the afternoon as Crude held below $50 BBL, with continuing concern about the global outlook in general, and the fate of Citigroup in particular, lending a note of caution to investors in Europe ahead of the U.S. Friday opening. In Moscow that saw a day sans trading halts. At the close the RTS was up 3.38% at 580.12, with the Rouble denominated Micex down by a similar amount – (down 3.14%) – at 516.93.
Crude nudged its way gently higher on reports that OPEC was starting to adhere to production cuts agreed last month, with Brent and WTI spot prices remaining below $50 BBL. Lukoil (down 4.62% on the Micex at close) fell after firming on reports it may take a stake in Spain’s Repsol on Thursday, with Rosneft (down 1.96%) also lower and GazpromNeft (up 1.14%), Ritek (up 0.93%) and Surgutneftegaz (up 0.18%) gaining. On the gas side of things Gazprom (down 4.79%) and Novatek (down 0.61%) both fell
Commodity prices saw base metals gain ground in early trade with Zinc, Copper, Nickel and Aluminium higher, before surrendering the gains throughout European trade. The day ended with Norilsk Nickel down 4.96%, Polymetal eking out a gain of 1.73%, and Polyus Gold at long last moving the same way as firming gold prices, with a 3.7% upside. Amongst the steelmakers it was a case of MMK (down 5.67%) playing Lee Van Cleef, Severstal (up 0.69%) getting Eli Wallach, and NLMK (up 4.04%) standing in for a much younger Clint Eastwood. Fertilizer producer, Acron, (down 7.79%) certainly wasn’t smelling of roses, but agricultural producer Razgulay (up 1.94%) was able to make some hay while the sun shined.
In the retail and consumer goods world Sedmoi Kontinent (up 13.89%) did a roaring trade with Magnit (up 3.42%) also pointing in the right direction. Wimm Bill Dann (up 4.14%) and Lebedyansky (up 0.41%) were drinking the right stuff, while Baltika (down 5.74%) may have had too much the night before. Kalina (down 0.18%) and Veropharm (down 1.35%) have had worse days of late.
In the banking world, weak global sentiment about the possibility of yet another big write off, and the intense interest in what happens to Citigroup from here, made for a light day with Sberbank (down 4.22%) and VTB (down 1.63%) lower, and Bank Moskvy (up 3.21%) and Bank Vozrozhdenie (up 1.91%) closing on the upside.
The wild world of Russian telecoms saw mixed results with Southern Telecom (up 12.13%) and Centre Telecom (up 15.12%) pushing all the right buttons, while Rostelecom (up 2.38%) Dalsvyaz (up 1.84%) and Volga Telecom (up 0.41%) pressed some, and investors hung up on MTS (down 2.33%) Sibirtelecom (down 2.49%) and Uralsviyazinform (down 0.55%).
Elsewhere truckmaker Kamaz (up 9.03%) roared into life, while Avtovaz (up 1.59%) moved along in first gear. IT services play Armada gained 5.82%, and property developer PIK Group slumped 26.3% on the news that a Moscow rival was dumping units on the market at a 25% discount due to financial pressures.
In Europe the days play saw the FTSE 100 pick up a 2.43% loss with Resources stocks gaining ground on the back of bargain buyers and covering short sellers rather than firming commodity prices. In Frankfurt the Dax shed 2.2% and in Paris the Cac 40 fell 3.33% with Societe Generale down 13%.
In the United States the alternation between euphoria and desolation was only a day away as Thursdays sell off turned into Fridays buying opportunity. The perspiration emanating from Citigroup continued under the sub heading ‘gush’ with another 19% trimming. But a topsy turvy and listless day was given a full head of steam late in the piece when it was disclosed that President elect Barrack Obama had chosen Timothy Geithner has his replacement for Hank Paulson. That saw stocks charge into the close like windsurfer coming to shore with a shark in hot pursuit. Fate will tell whether he can turn around or not the world largest economy, but let history record that his announcement was greeted by a 6.54% rise on the Dow with the Nasdaq up 5.18%.