May 15 (Finam) -- The Russian stock market stormed new highs on the heels of PM Vladimir Putin's statements about tax breaks for Russia's oil sector. By the closing bell the RTS Index spiked 2.8% and the MICEX Index advanced 3.5%.
Wednesday's top outperformers were O&G plays: Surgutneftegaz bolted up 10.7%, Rosneft soared 6.2%, Lukoil surged 5.4%, Tatneft jumped 3.7% and Gazprom ended 2.8% higher. Despite external negativity, domestic bank stocks also locked in gains: Sberbank edged up 1.6% and VTB added on 1.5%. Metal issuers, except Norilsk Nickel (+2.6%), were out of favor: Severstal was up 1.4%, NLMK rose 0.8% and MMK inched up 0.4%. UES bucked the uptrend and saw 1.7% shaved off its market cap Wednesday.
U.S. stock indices headed north, with gains averaging 0.5% on the back of the U.S. Labor Department's report about a less-than-expected rise in consumer prices in April. Asian trading floors are heading firmly along a northbound track this morning amid favorable corporate news. Commodity markets were largely down yesterday. That said, crude futures are still hovering slightly below their all-time highs.
Today's external news flow is largely upbeat. However, the market will be driven by the internal news flow. We expect oil and gas plays to kick off to the upside, as they will likely continue to rack up gains on the prime minister's recent statements about easing the tax burden on oil companies. Other issuers will most likely remain on the sidelines. In our view, the domestic equity market is overheated and a correction is still likely in the days to come, although Putin's statements could spark a new trend.
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