Russian Stock Market Experiences Its Biggest One-Day Plunge in Three Years
Russia’s stock market took a severe hit on Wednesday, recording its most significant single-day drop in three years. This downturn followed a troubling statement from a senior diplomat, who revealed that the momentum for a peace agreement to end the conflict in Ukraine has largely stalled. This sobering news shook investor confidence dramatically.
The Moscow Exchange (MOEX) Index, which tracks the 40 largest publicly traded companies in Russia, plunged 4.05% to 2,563.3 points—its lowest level since December 2024 and the sharpest daily decline since September 2022. This kind of drop signals deep unease in the financial markets.
Leading major stocks took heavy losses: Gazprom declined by 4.1%, Sberbank slipped 4.9%, VTB fell 4.7%, and Rosneft decreased by 2.5%. Other significant companies, including Severstal and Aeroflot, each dropped almost 5%, while Rostelecom, Inter RAO, and Magnitogorsk Iron & Steel Works fell over 5%. Mechel suffered the steepest plunge with a decline of 6.7%.
Yaroslav Kabakov, strategy director at Finam, summarized the mood bluntly: “Geopolitical tensions continue to weigh heavily on investors.”
The selloff gained momentum after Deputy Foreign Minister Sergei Ryabkov stated that the "strong momentum in favor of reaching agreements" following President Vladimir Putin’s meeting with Donald Trump in Alaska had completely dissipated. Ryabkov added that the framework of Moscow’s relationship with Washington was breaking down, and the Kremlin detected no meaningful moves from the U.S. toward repairing ties.
Just the day before, Putin reaffirmed to senior military commanders that their mission remained firm: to "ensure the unconditional achievement of all goals of the special military operation." This uncompromising stance adds another layer of uncertainty and risk, fueling market pessimism.
PSB Bank analysts pointed out that after a period of heightened optimism and rising stock prices, investors are now engulfed by a wave of gloom. The MOEX index has now experienced a decline for five weeks in a row, shedding over 22%—a staggering loss of approximately 1.3 trillion rubles (about $15.9 billion according to Reuters’ foreign exchange data) since February when Putin and Trump first spoke after Trump’s inauguration.
This persistent market slide could be a warning sign of deeper economic troubles ahead, cautioned Andrei Khokhrin, CEO of Ivolga Capital. While Russia’s economy had been sustained in recent years by substantial military expenditure, signs of slowdown are now evident. GDP growth almost came to a halt during the summer months, growing a mere 0.4% year-over-year in July and August.
Moreover, civilian industries are shrinking, with significant drops reported in clothing production (down 9.1%), furniture (12.7%), food (2.1%), and metals (8.4%), according to Khokhrin. The World Bank has also revised downward its forecasts for Russia’s economic growth, projecting only 0.9% growth in 2025, 0.8% in 2026, and 1% in 2027.
This raises crucial questions: Is Russia’s prolonged military focus now backfiring economically? Could the persistent geopolitical stalemate be driving investors away permanently? And what are the long-term implications for Russia’s financial stability? These are the debates heating up among analysts and investors alike. What’s your take? Do you see a potential turnaround, or will the pessimism deepen? Share your thoughts below.
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