The Moscow stock market took a sharp dive following Donald Trump's statements about possible tougher sanctions against Russia.

Source: The Moscow Times

Details: The Moscow Times noted that in just a few hours of trading, the Moscow Exchange Index lost 1.51%, and capitalisation fell by 100 billion roubles (about US$1.1 billion).

Shares of Gazprom, Russia’s largest oil and gas company, were hit the hardest, falling by 3.5%. Sberbank and VTB shares dropped by 1.5% and 2.4% respectively. The pressure intensified after reports that the EU was preparing to disconnect another 20 Russian banks from SWIFT.

Among the leaders of the decline were Sovcomflot (-2.6%), Severstal (-2%), Aeroflot and Magnit (-2.2%). Rosneft shares fell by 1.4%.

Russian analyst Yevgeny Loktyukhov explains the situation as a deterioration in the geopolitical background and the protracted negotiations on Ukraine.

According to Alor Broker analyst Alexei Antonov, the main reasons for the decline lie in the Russian economy itself: "Most large companies have reported a decline in financial performance, and some have become unprofitable. The second quarter promises to be even worse for the market as a whole."

In addition, the rouble remains strong, which is hitting the revenues of exporters, who account for more than 50% of the index. Finam strategy director Yaroslav Kabakov notes: "This is causing a revaluation of companies in the metallurgy, oil, fertiliser and agricultural sectors."

Background: 

• Russian leader Vladimir Putin’s press secretary Dmitry Peskov commented on US President Donald Trump's statement that Vladimir Putin has "has gone absolutely crazy" in response to the latest air strikes on Ukraine.
• Shortly before that, Trump told reporters that he was deeply dissatisfied with Vladimir Putin's actions and stressed that he did not understand the reasons for the Russian leader's current actions.
• After that, Trump sharply criticised Putin on his social network Truth Social, saying that he had gone absolutely crazy and warned that if he tried to take over all of Ukraine, it would lead to the downfall of Russia.
• The Russian stock and currency markets sharply declined in trading on Wednesday after it was reported that talks on a ceasefire in Ukraine had been cancelled.

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