Market Buzz: RTS profits gone with rouble

Reuters / Andrea Comas
Europe’s worsening debt crisis has driven the Russian rouble to its weakest level in three years. The currency lost 2.2 % to 33.48 to the US dollar on Thursday, extending its month-long drop to 12%.

­“European financial turmoil, decreasing oil prices and the weakening of the Russian national currency affect the Russian markets,” says Kirill Markin from Investcafe.

On Thursday the dollar-based RTS slumped 2.38% on Thursday and the rouble-denominated MICEX lost 0.14%

“We expect the opening of the markets to be in the negative mood. The performance in the second half of the day will strongly depend on global macroeconomic statistics released on Friday,” Markin said.

The euro hit a two-year low on Friday and is set to see further losses in coming weeks, dragged down by worries that Spain may need external aid to help its struggling banking sector.

Asian stock markets were mixed on Friday with investors concerned about the economic situation in Europe. A weak close on Wall Street overnight following a slew of disappointing US economic data is also supporting the weakness in the Asian region.

Hong Kong stocks, though, turned higher, despite data showing a slowdown in Chinese manufacturing, on hopes that China will now launch more measures to help its economy.

Japan’s Nikkei Stock Average was down 1.24%, the Shanghai Composite is 0.4% higher, Hong Kong’s Hang Seng Index is up 0.1% and South Korea’s Kospi slipped 0.3%.

China’s official state release of the manufacturing Purchasing Managers’ Index (PMI) declined to 50.4 in May, from 53.3 in April, below expectations. The number of new orders decreased more than four percentage points, with inventories rising and prices lowering due to weaker demand.

Asian investors were discouraged by a weak session in the US. Disappointing jobs and business activity data kept investors sidelined ahead of the closely-watched non-farm payroll report due Friday. The US markets ended lower on concerns over the eurozone debt crisis in addition to worries over a slowing US economy. The Dow Jones Industrial Average was down 0.21%. Nasdaq Composite lost 0.35%. Standard & Poor's 500 inched lower 0.23%.

As to the economic data, the US economy grew just 1.9% in the first quarter against advance reading of 2.2%. Private-sector jobs growth came in at a tepid 133,000 in May. Meanwhile, the initial jobless claims for week ended May 26 rose by 10,000 to a seasonally-adjusted 383,000. Claims have now risen in seven of the last eight weeks.

Yields on 10-year US treasury hit a new record low as demand for safe haven grows. Investors will be watching the release of US non-farm payrolls employment with unemployment rate expected to come in unchanged at 8.1%.

The European markets were mostly lower on Thursday.

The European Central Bank President Mario Draghi said that the bank cannot fix the turmoil in the currency bloc and urged eurozone leaders to come up with a “vision” for the coming years. He also hinted that he supports the direct injection of capital into banks by the permanent rescue fund.

The DAX  lost 0.26%, the CAC 40 inched higher 0.05%. The FTSE 100 slipped into red 0.03%.
With Ireland voting in a referendum, opinion polls seem to be showing that the country will support the new German-backed EU fiscal treaty. Results are expected to be announced by Friday afternoon.