Russian stocks experienced a free fall

The Russian index MOEX depreciated up to ten percent on Wednesday morning, but later erased the loss significantly, and around 11:00 CET it was only less than 3.5 percent.

The RTS index, in which prices are expressed in dollars, lost about 2.9 percent at the same time. After the start of trading, it fell to its lowest level since April 27.

“The hard hit for Russian stocks came for several reasons. The announcement of mobilization in Russia came on the same day that separatists in Ukraine announced that they wanted to speed up a referendum on joining Russia. The Russian government’s plans to increase taxes on the extraction and export of commodities also partly contributed to the drop,” said XTB analyst Štěpán Hájek.

Of the specific stocks, after 11:00 CET, gas giant Gazprom claimed a five percent loss, Russia’s largest oil company Rosneft and oil exporter Transneft were in the red by 4.6 percent. At the beginning of trading, however, these companies lost around 12 percent.

“So the biggest Russian companies, such as Lukoil, Gazprom and Novatek, pulled the entire Russian index significantly lower. Although the Russian stock and foreign exchange market is largely cut off from foreign investors, the tension of the last few days may keep stocks in particular under pressure. The development of the Russian ruble will largely depend on Europe’s continued attempts to cut itself off from Russian energies,” Hájek added.

US stocks experienced their sharpest decline in two years

Economic

The ruble is the world’s best performing currency this year. But this was mainly contributed by the extraordinary restriction on the movement of capital, which was introduced by the central bank in an attempt to stop the massive sell-off of Russian assets and prevent the outflow of foreign exchange.

The Bloomberg agency pointed out that shares on the Moscow stock exchange began to fall significantly already on Tuesday, when the first indications appeared that Putin could further escalate the conflict in Ukraine.

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