Russian Stock Market Plummets as Peace Deal Hopes Fade Amid Geopolitical Tensions

Russia’s stock market experienced its largest single-day drop in three years on Wednesday, following comments from a senior diplomat indicating that efforts towards a potential peace agreement to resolve the Ukraine conflict had largely come to a standstill.

The Moscow Exchange (MOEX) Index, which monitors 40 of the nation’s biggest publicly traded firms, decreased by 4.05%, landing at 2,563.3 points, its lowest point since December 2024, marking the most significant drop in a single day since September 2022.

Shares of Gazprom declined by 4.1%, while Sberbank fell by 4.9%, VTB by 4.7%, and Rosneft by 2.5%.

Both Severstal and Aeroflot saw nearly 5% decreases, with Rostelecom, Inter RAO, and Magnitogorsk Iron & Steel Works each losing over 5%. Mechel experienced the sharpest downturn, plummeting by 6.7%.

«Investor sentiment is being weighed down by ongoing geopolitical tensions,» remarked Yaroslav Kabakov, strategy director at Finam.

The decline intensified after Deputy Foreign Minister Sergei Ryabkov stated that the «strong momentum towards achieving agreements» following President Vladimir Putin’s meeting with Donald Trump in Alaska had «run its course.»

Ryabkov further noted that the «framework» of Moscow’s relations with Washington was «crumbling» and that the Kremlin had not observed «any progress» from the U.S. in terms of restoring relations.

Just a day before, Putin had communicated to senior military leaders that their mission remained unchanged: to «unconditionally achieve all objectives of the special military operation.»

«Following a phase of heightened expectations and increasing stock prices, a wave of pessimism has engulfed investors,» analysts from PSB Bank stated.

The MOEX index has now recorded five consecutive weeks of losses.

Since February, when Putin and Trump held their initial phone conversation after Trump’s inauguration in January, it has decreased by over 22%, which translates to a loss of 1.3 trillion rubles (approximately $15.9 billion, per Reuters spot foreign exchange data) in market value.

Prolonged declines in stock markets often signal deeper economic challenges, cautioned Andrei Khokhrin, CEO of Ivolga Capital.

Russia’s economy, which had been supported in recent years through substantial military expenditures, is now showing signs of deceleration. GDP growth nearly flatlined this summer, with a mere 0.4% year-on-year increase in July and August.

Civilian sectors have suffered, with clothing production down 9.1%, furniture by 12.7%, food by 2.1%, and metals by 8.4%, Khokhrin noted.

The World Bank recently revised its outlook for Russia’s economy, anticipating growth of 0.9% in 2025, 0.8% in 2026, and 1% in 2027.