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Norvik Research 06.04.2017

06/04/2017 18:19

Global developments

Global stocks are fluctuating as Donald Trump and Xi Jinping began two-day meeting in Florida today before publication of nonfarm payroll data tomorrow. Nikkei 225 is 1.5% down, CSI 300 is up 0.3%. S&P futures are 0.2% higher, while Eurostoxx 600 is 0.1% lower. The dollar index is up 0.1%, US 10Y Treasury yields are up 1 bp at 2.34%.

Oil prices are rising amid OPEC’s efforts to extend oil output cuts despite a surprise increase in US stockpiles. Brent prices are up 0.8% today at $54.8/bbl extending its weekly gain to 4.0%.

Russia and CIS area developments and market colour

Russia’s inflation in March declined to 4.3% YoY, from 4.6% in February. The outturn was in line with market consensus consistent with weekly data. Officially measured core inflation fell to 4.5% YoY from 5.0% in February. Food price inflation fell to 3.5% YoY from 3.7% while non-food goods inflation fell to 5.1% from 5.7%. Services price inflation declined marginally to 4.2% in March from 4.3% in February. Inflation dynamics appear to have benefited from the strength of the exchange rate. The gap between headline inflation and the key rate (10.0%) remains very high at 545 bps and we expect the central bank to continue cutting the key rate at its next rate setting meeting on 28 April (either by 25bps or 50 bps).

MinFin marginally increased its daily FX purchase volume in April to RUB 3.5bn ($63mn) from RUB 3.2bn ($55mn) in March. The increase is due to a lower number of trading days in April. The total amount of FX purchases, however, declined to RUB 69.9bn in April from RUB 70.5bn in March.

The rouble is 0.5% stronger at 56.3 against the dollar. OFZ yields are without significant changes. Russian longer-term Eurobonds yields are about 1-2 bps tighter.

Corporate news

Law enforcement services seized documents in Alrosa office in Moscow. Alrosa shares are down 0.5%. The 2020 Eurobond price is without significant changes.

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