The Russian equity market stayed relatively quiet mainly driven by international news flow

Global markets: Weekly overview

22 December 2008

The S&P 500 is poised to record its worst year since the Great Depression after losses and write-downs at the largest global financial companies reached almost $1tn and earnings at US companies dropped for five straight quarters, matching the longest streak on record.

This week, the US market received a boost on Tuesday when the Federal Reserve’s reduction of its benchmark rate to 0.0-0.25% and its plan to use "all available tools" to revive the economy caused the market to surge. However, the effect of the rate cut did not last long and the US market retreated on Wednesday and Thursday as poor corporate and economic news weighed on investors.

The dollar suffered its biggest weekly fall against the euro since the 15-nation currency’s 1999 debut and sank to a 13-year low versus the yen after the rate cut, before recovering a little at the end of the week. Meanwhile, ruble devaluation continues and its exchange rate against the bi-currency basket fell by another 3.0% on Monday and Tuesday.

Oil lost more than 20% or $10/bbl this week, despite OPEC’s plan to cut production. The organization stated on Thursday that it would cut output by 2.5m bpd to 24.8m bpd.

The Russian equity market stayed relatively quiet, trading largely sideways. The market was mainly driven by international news flow. Stocks went down on Thursday and Friday, under pressure from sinking oil prices. The RTS Index managed to close the week relatively flat, losing less than 2%.

It became known on Thursday that domestic natural gas prices will rise more slowly than expected as the government seeks to soften the effects of the country’s worst economic crisis in a decade. Gas prices for households will rise 5% on January 1, down from a planned 25% increase.

Source: Troika Dialog

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