The Russian stock market is under attack due to foreign policy

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While stock markets around the world are celebrating a new stage in Sino-American relations, where the parties have moved from confrontation to peace talks, the Russian courts have come under severe pressure. The diplomatic conflict between Britain and Russia has grown to a global scale – EU countries and several other States unanimously decided to expel Russian diplomats from the case Skripal. Moscow has responded that it is ready to respond to the actions of the EU and NATO. The degree of tension is growing, and so ahead of domestic assets – new sales.
Negative reaction of the ruble and stock market indices, we observed the day before, when the index Mosberg and RTS sank by 2% and 2.5% respectively. The ruble also dipped significantly, particularly in tandem with the Euro. The pair dollar/ruble suffered more moderate losses by maintaining the pressure on the American currency on the international Forex market.
Today the Russian stock market risks continue to fall amid renewed concerns over sanctions against Moscow. Under these conditions, the positive dynamics in global markets is unlikely to have a significant support to domestic assets, which again are forced to focus on geopolitical factors.
As for the ruble, the bearish risks remain, but attempts to increase oil, which is trading near multi-year highs, a weak dollar, as well as the final stage of the tax period in this situation is able to serve as a safety cushion and limit the downside potential of the currency.
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Sergey Kostenko,
Investment analyst
GLOBAL FX