Stocks in Russia rose sharply on Thursday as investors became more optimistic about potential peace negotiations with Ukraine. It was a result of reports about a conversation between Donald Trump, former U.S. presidential candidate and Russian president Vladimir Putin.
The context: Economic pressure and Sanctions against Russia
Experts at Carnegie Endowment for International Peace say that since February 2022 when Russia began its military action in Ukraine, it has been subjected to international sanctions. The measures taken include but are not limited to the restrictions imposed by SWIFT, a global banking system. They also limit access to foreign reserves. Moreover, European nations reduced the purchase of Russian oil. Together with increasing military spending, these factors put a demonstrable strain on the Russian economic system.
Details on the Trump-Putin Call and Prisoner Exchange
Trump said on Twitter that he engaged Putin in “a lengthy” telephone conversation. The Kremlin confirmed the conversation, saying that the phone call lasted 90 minutes and suggesting a meeting between both leaders. It was the first communication known between Trump and Putin after Trump’s departure from office.
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In the days leading up to that call, Russia exchanged prisoners with America and released Marc Fogel. According to U.S. authorities, Alexander Vinnik, a convicted Russian, was freed in exchange. Trump has repeatedly expressed his desire to resolve the Ukrainian conflict quickly, but concrete details of his strategy are not disclosed.
MOEX, Ruble and Russian market react:
The Moscow Times reported that the Moscow Exchange (MOEX), following this news, experienced an increase of more than 6 percent. It reached 3,210 points. Similarly, the RTS Index rose over 6 percent to 1,080.
Reuters has reported a substantial increase in ruble value, with the currency increasing by 3.7 percent (based on data from the over-the counter market) to reach 90.50 dollars. The Moscow Times reports that the shares of Russian companies such as Novatek and Gazprom have also seen significant increases, with gains in excess of 8 percent. Reuters reports that the Russian stock exchange has grown 11.1 percent overall since January.
The Analyst’s Perspective on Market Activity
Reuters cited analysts at Sinara brokerage as observing that:
Investors have finally gotten the moment they’ve been hoping for. Next step in easing tensions on the geopolitical front.”
Sofya Donnets, from T-Bank gave a more tempered opinion. This was also reported by Reuters.
Even in a best-case situation, the road will have its ups and downs. Investors must pay close attention.
Look Ahead at Potential Trump-Putin meeting and its Implications
Trump announced a meeting between him and Putin after his talks with the Ukrainian president Volodymyr Zelenskyy. Global community is watching closely how the dialogues affect the Ukraine conflict’s trajectory and geopolitical environment. Markets’ trajectory may be affected by the possibility of geopolitical tensions being eased, but there is still uncertainty.