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Russia markets end Monday session with decline of 1.75% for MICEX, 4.94% for RTS

August 24, 2015, 20:15 UTC+3 MOSCOW

The Russian exchange market and the ruble showed a sharp decline on Monday amid falling oil prices

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© ITAR-TASS/Alexey Filippov

MOSCOW, August 24. /TASS/. The Russia markets ended the session on Monday with a decline of 1.75% for the MICEX index to 1634.14 and of 4.94% for RTS index to 724.73.

During the session the RTS index neared 700 falling by 7.1$ to the minimum level first time since December 2014.

The Russian exchange market and the ruble showed a sharp decline on Monday amid the collapse in oil price.

On Monday, the price of futures contract for Brent crude oil with the delivery in October fell by 5.5% to $42.96 per barrel.

The price of Brent crude oil fell below $45, 44 and 43 per barrel, reaching to the lowest level since 2009.

Amid this background the dollar jumped by 2.54 rubles to 71.64 rubles, exceeding 71 rubles for the first time since January 30. The euro reached a new maximum soaring by 4.98 rubles to 83.61 rubles.

According to Mikhail Krylov, head of the analytical department at Golden Hills-AM Capital, the long period of low oil prices poses risks for Russia’s budget.

"Most of the projects in the priority areas will rise in price, while part of public spending may have to be given up, which will lead to a stronger economic slowdown. During the day we expect the fall of the MICEX index to 1600 points and the RTS index to 700 points," he said.

In addition, foreign markets also had a strong impact on the Russian stock market.

On Monday, the Shanghai Stock Exchange Composite Index fell by 8.49% to 3209.91 points, triggering a rapid reduction of the major stock indices in the US at the opening of the session on the New York Stock Exchange.

Dow Jones (main indicator of business activity in the US) fell by 6.01 % to 15,470.34 points in the first minute of the trading session, but then the decline slowed down.

S&P 500, which includes 500 of the largest companies of the US market fell nearly 100 points, or 5.02 % to 1872.72 points.

Electronic exchange NASDAQ Index fell by 7.7 % ending at 4343.86 points.

In addition, the European Stoxx 600 stock index fell 5.3 % which is the maximum value since 2008.

Shamil Kuramshin, an investment analyst with Freedom Finance, attributes the negative trend on the US market to the lack of a clear growth driver: weak Chinese macroeconomic data, a general devaluation in developing countries, the decline in oil prices and a possible increase in Federal funds rate led to the sell-off on the global markets, including Europe.

"We expect S&P 500 to close at 1870-1890 points today. But the next week we expect growth, which usually happens after such a precipitous fall," the expert said.

Accoridng to the results of Monday’s trading on the Moscow Exchange, the top gainers are the shares Uralkali fertilizer producer (+ 3.6%) preference shares of Transneft (+2.2%) and the shares of VSMPO-Avisma (+1.6%). The leaders in falling are the shares of TGC-1 (territorial generating company) (-6%) preference shares of Mechel metal company (-5.4 %) and common shares of the Raspadskaya mine (-5.3%).

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