Russian stocks and bonds fell amid rising geopolitical tensions

Russian stocks and bonds fell amid rising geopolitical tensions

MOSCOW, November 24. The stock indices of the Russian Federation has finished today’s trading with a sharp drop. So, the MICEX index (MICEX) on the results of today’s trading on the Moscow exchange fell 3.11% to 1810,05 points, and RTS – on 3,34% to 867,54 item.

On the eve of the MICEX surged by 2.26% and ended the day on 23 November at the highest level since June 2008 “the reason for the deterioration of the situation on the market was the intensification of geopolitical risks. However, the same geopolitical factors supporting oil prices – the Brent futures traded above $45 per barrel”, – says a leading analyst of investment group “OLMA” Anton Startsev.

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© Alexey Filippov/TASS archive

Russian indices fell amid reports about a downed fighter

Front-line bomber su-24 Russian air group crashed in Syria. According to the President of the Russian Federation Vladimir Putin, the plane was shot down by a missile “air-air”, released by Turkish fighter F-16.

The price of a futures contract with delivery in January for oil grade Brent on London exchange ICE increased by 2.1% to $45,76 per barrel, exceeding $46/bbl earlier today.

Nevertheless, the Russian stock market may regain losses soon. “Measured response of the President of Russia on events in Turkey paves the way for the increase of the stock market to the purposes of 1860 points on the MICEX, and 892 points – on RTS”, – says Director of the analytical Department of the IR “Golden Hills – Kapital AM” Mikhail Krylov.

According to Vladimir Putin, the Turkish air force attack on the Russian su-24 aircraft which took part in anti-terrorist operations in Syria and did not pose a threat to Turkey, is a “stab in the back” of Russia.

The bond market is today the Russian Federation also decreased. So, OFZ bonds maturing in January 2028 fell by 1.24% and Eurobonds maturing in 2042, 69 b.p.

The movement was negative, but the main part is not related to this incident, says the head of debt markets “URALSIB capital” Dmitry Dudkin.

“It rather looks like the continuation of the correction after a rather large growth in Eurobonds and Federal loan bonds. On the market of OFZ holders is mainly passive investors, they are unlikely to sell on such speculative news. Until the situation looks ominous for investors. Eurobonds maturing in 2042, one of liquid securities. She fell on the news a maximum of 50 b.p., that yield is almost unnoticeable at such length. While investors probably consider this event as not leading to any long-term negative consequences. It is very difficult to assess how the situation will develop further”, – said the expert.