Massive Crisis Unfolding In Russia

Russian stocks have fallen by 2 trillion rubles in two days.

The Russian stock market has experienced its worst week in two and a half years amid Donald Trump's decision to impose record import duties in 100 years and a collapse in oil prices, which were hit by the OPEC+ decision to sharply increase production, The Moscow Times writes.

The capitalization of the Moscow Exchange stock market has fallen by 2 trillion rubles in two days, according to exchange data: at the end of trading on Wednesday, it was 55.04 trillion rubles, and by Friday evening, it was already 53.02 trillion. The Moscow Exchange Index, which includes securities of 43 of the largest companies, lost 8.05% by the end of the week, showing the worst result since the end of September 2022, when the market was gripped by panic due to mobilization.

Following the trading results on Friday, Sberbank fell by 5.2%, Gazprom by 4.9%, VTB by 6%, Rosneft by 3.9%, and Lukoil by 4.6%. Mechel shares lost more than 7%, Aeroflot quotes fell by 4.8%, and Novatek by 5.4%.

“A powerful crisis is unfolding before our eyes,” says Evgeny Kogan, an investment banker and professor at the Higher School of Economics. Trump’s tariffs are radically changing the rules of the game in global trade and promise the world economy its third recession since the beginning of the century: JPMogran analysts estimate its probability at 60%.

Against this backdrop, raw materials are rapidly becoming cheaper: the price of Brent oil has fallen by 12% in two days and at the peak of the sell-off reached $64.06 per barrel — the lowest level since April 2021. Copper futures have fallen by 11% in two days. US stock indices lost 5% on Thursday and the same amount on Friday. Friday's European stock exchanges ended with a 4-5% collapse after China announced retaliatory duties of 34% on all US goods.

For the Russian economy, global trade wars promise a drop in commodity prices, an increase in import prices and a new round of inflation, lists Veles Capital analyst Elena Kozhukhova.

Cheap oil also means budget problems and may lead to a fall in the ruble in the coming months, warns Kogan: “Progress in peace talks could save the situation, but it is not yet in sight.”

The trip to Washington by head of the Russian Direct Investment Fund Kirill Dmitriev, which took place after Trump threatened tough sanctions against Russian oil, did not bring a breakthrough. The US is ready to wait a few more weeks, not months, and “the clock is ticking”, said Secretary of State Marco Rubio after a meeting with Dmitriev.

Since mid-February, when Russian-American talks began, Gazprom has already fallen by 30%, Norilsk Nickel by 25%, and Rosneft by 28%. And margin calls have probably begun on the market, Kogan does not rule out.

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