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Norvik Research 16.01.2017

16/01/2017 17:00

Global developments

Risk-off sentiment prevails at the start of the new trading week, with most equity markets and commodities posting declines. China’s stock indices were affected by local media reports about forthcoming IPO-related supply, with CSI 300 closing 0.1% down after paring earlier losses while Shenzhen Composite fell 3.6% after an earlier drop by 6%. Both Nikkei 225 and Hang Seng fell 1%. US markets are closed for a holiday today, after S&P 500 rose 0.2% on Friday. EuroStoxx 600 is 0.2% lower. FTSE 100 is flat, supported by the sterling’s renewed weakness.

The dollar is stronger against a basket of currencies today. The US dollar index is up 0.4% today, after a 0.3% drop on Friday. US 10-year yields are flat at lower at 2.40%. EURUSD is 0.5% lower at 1.059. GBPUSD declined 1.0% over the weekend on concerns that the government will this week unveil plans to leave the single market. Gold prices are up 0.5% today to $1,203 per ounce, near a 2-month high.

Oil prices are lower today on concerns about transitory nature of OPEC’s output cuts. Saudi energy minister said that OPEC is unlikely to extend the curbs into H2 2017 in view of projected increases in demand over the summer. Baker Hughes data show the rotary rigs number down 7 to 522 in the previous week. Brent prices are 0.5% down today at $55.4/bbl after declining 1.0% on Friday.

Russia and CIS area developments and market colour

Russia’s exports data for November surprised to the upside. The dollar value of exports rose 4.9% YoY to $26.6bn (consensus: $24.9bn), after a 7.6% YoY drop in October, while imports’ 6.4% YoY increase was in line with expectations. On the 12-month rolling basis, trade surplus rose by $0.2bn in November to $89.9bn, the first annual improvement since February 2015.

The rouble is marginally weaker at 59.6 against the dollar. OFZ yields are wider by up to 2bps, following a similar performance on Friday. Russia’s and Kazakhstan’s longer-term sovereign Eurobond yields are 1-2 bps wider today. Belarus-18 and Azerbaijan-24 are 18 bps and 2 bps wider respectively. Ukraine sovereign bond yields are broadly unchanged.

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