Install

Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

MICEX Rises Above 1,000

Surging oil prices, encouraging stress-test results for Russian banks and a series of positive economic forecasts buoyed investor optimism Thursday and lifted the benchmark MICEX Index past 1,000 for the first time since Oct. 1.

As of 12:15 p.m., the 30-stock index was at 1017.5, up 3.2 percent on the day and a stunning 98 percent from its one-year low in October of 515.

The rise in share prices came as benchmark U.S. crude futures topped $57 per barrel, its highest intraday price since Nov. 17, on reports of a smaller-than-expected increase in U.S. stockpiles. The gain represents a 27 percent increase on the year for crude, Russia's main export.

The government has revised this year's budget based on a $41 per barrel price for Urals crude, Russia's main export blend. In April, the Economic Development Ministry said it raised its 2009 average forecast for the blend to $45 amid signs that global demand was steadying.

Investors also took heart at encouraging signs about the health of domestic banks. Central Bank First Deputy Chairman Alexander Ulyukayev published an article in the May issue of the bank's magazine saying Russian lenders could weather a drop in the price of oil to $25 per barrel, provided external debt does not rise above the current level.

Adding to the positive mood was a research note published Wednesday evening by the Bank of Moscow titled "There Will be No Second Wave," referring to a possible aftershock from last fall's liquidity crisis. Top bankers, including Sberbank chief German Gref and Alfa Bank president Pyotr Aven, have warned that rising bad debt threatens to bring about another crisis in the sector.

Bank of Moscow analysts said in the note that the Russian economy would find its bottom within the next three months and predicted 7.4 percent GDP growth next year, as well as further strength in the domestic financial markets.

The government's official forecast is for a 2.2 percent contraction this year, although Deputy Economic Development Minister Andrei Klepach said GDP could fall as much as 6 percent.

VTB Capital said Thursday that its GDP indicator showed that the economic downturn was slowing, however, with a 4.7 percent decline in April compared with year earlier. In March, the survey indicated a decline of 5.4 percent, year on year.

The ruble reflected the strength in commodities and financial markets, climbing for a fourth straight day to 37.61 against its target currency basket just past noon.