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Norvik Research 30.11.2016

30/11/2016 17:04

Global developments

Oil prices are rallying today in anticipation of a positive outcome of OPEC meeting in Vienna. Iraq’s oil minister said this morning that OPEC representatives were “unanimous” in their intentions to reach an output cut deal. In turn, Iran’s oil minister said there were “acceptable” proposals on the table, even though his country would not commit to a freeze in output. The OPEC delegates are supposed to finalise today the end-September agreement on cutting the total output to 32.5-33.0 bn b/d, from 33.6 bn in October, but last-minute disagreements between Saudi Arabia, Iraq and Iran prevented an early deal. OPEC’s press conference in Vienna is due to start at 15.00 GMT. The American Petroleum Institute reported that crude oil inventories declined 0.7 mn bbl in the previous week. Brent prices soared nearly 8% today to $50/bbl following yesterday’s 4% decline.

US macroeconomic data came out better than expected. GDP growth in Q3 was 3.2% QoQ (annualized), higher than consensus of 3.0% and Q2 reading of 2.9% QoQ. Personal consumption advanced 2.8% QoQ against consensus of 2.3% QoQ. S&P futures are 0.2% higher, having increased 0.1% yesterday. The dollar index is 0.2% higher. 10-year US Treasury yields are up 5 bp to 2.34%.

Preliminary Eurozone aggregate inflation came out at 0.6% YoY, in line with consensus forecast, accelerating from 0.5% YoY in September ahead of ECB policy meeting next week. Euro Stoxx 600 is 0.2% higher. CSI 300 is down 0.8% while Nikkei 225 is 0.1% lower. Copper is 0.5% higher after falling above 2% yesterday. Gold is down 0.2% while Bloomberg commodity index is up 1.6%.

Russia and CIS area developments and market colour

The rouble is 1.2% stronger at 64.3 against the dollar. OFZ yields are 1-5 bps tighter today. Russia and Kazakhstan longer-term sovereign Eurobond yields are 1-2 bps tighter today. Armenia-25 and Azerbaijan-24 are 3 and 9 bps tighter.

Corporate news

MMK plans to increase capital expenditure. Board chairman Rashnikov, said during his meeting with president Putin that the company plans to increase capital expenditures by about 50% to $0.7-0.8bn a year. Management of the company earlier projected that capital expenditure at $0.4-0.6bn a year including $0.2-0.25bn for maintenance.

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