Return to trade brings an upside for Russian stocks
After a volatile start to the day the RTS and Micex both added more than 4% with the dollar denominated RTS closing up 4.8% and the ruble denominated Micex adding 4.1% and coming off a three year low. With signs of a floor appearing underneath oil prices in the wake of last weeks announcement of a production cut by OPEC, energy majors had a positive day as both Nymex and Brent crude futures held above $US 60 BBL. This saw Gazprom add 6.2% with its oil production arm Gazprom-Neft adding 7.6% and Surgutneftegaz and Lukoil gain 7.7% and 7.4% respectively.
Sberbank added 3.4% in the wake of reports it has turned down an offer from Britain’s Barclays Bank to exchange a 5% holding. Its state owned counterpart VTB closed more than 10% higher on speculation it is now considering the deal, although Finance Minister Alexei Kudrin said, late in the day, that the VTB Board had received no proposals on the matter.
Rebounding commodity prices also added to the sentiment with Raspadskaya adding 6.5% and Polyus Gold and Norilsk Nickel also gaining, with the main fall on the day suffered by RusHydro, down 11%, in the wake of a downgrade by S&P.
The return of the Russian exchanges came after Asian markets rebound strongly In Japan, the Nikkei closed more than 6% higher, after falling below the 7000 mark for the first time in 26 years, with the government bringing forward a ban on naked short selling which had been due to come into effect from November 4. Hong Kong rebounded more than 14% in late afternoon trade from the 12% slump it endured on Monday.
Trade in Europe saw the FTSE 100 close 1.9% higher with resources stocks leading the way after the release of strong BP 3rd quarter results. In Paris the Cac 40 added 1.5% with Sanofi-Aventis and Total adding more than 6%. In Frankfurt the Dax enjoyed another surge with Volkswagen shares jumping a further 81% to follow from Monday's 147% leap. This follows the announcement that fellow carmaker Porsche now controls more than 74% of Volkswagen and with Hedge Funds desperately needing to buy shares at any price in the carmaker to cover short positions.
The positive mood elsewhere flowed through to the U.S. where the Dow Jones added nearly 11% with Alcoa up more than 17%, Boeing gaining more than14% and with Intel up more than 10%. The 889 point rebound came despite the release of consumer sentiment data showing it has fallen to a record low in October, and with the unveiling of more bad housing data. But the easing of credit as the U.S. Federal Reserve starts buying corporate paper and the expectation that the overnight rate will again be cut from Wednesday, saw bargain hunters return to buying after a couple of days of record falls.