The Russian Market Has Gone Into Free Fall

The Moscow Exchange Index is at its lowest level since February 2023.

After starting the week with its sharpest decline since the fall of 2022, the Russian stock market has been unable to find a bottom.

On Wednesday, the Moscow Exchange Index once again hit more than a three-year low amid escalating tensions with Ukraine and growing rumors that the authorities might announce a new mass mobilization following the State Duma elections. At the close of trading, the index—which includes shares of Russia’s 46 largest companies—lost another 4% and fell to 2,230.47 points, its lowest level since February 2023. Since the start of the week, the market has fallen by 7.3%, and since the beginning of June—by nearly 13%, And if this trend continues, June 2026 will be the stock market’s worst month since September 2022, reports The Moscow Times.

Such a collapse cannot be explained solely by the Central Bank’s disappointing decision last Friday to cut rates less than expected, according to analysts at Vector Capital: “Large investors are pulling out of the stock market,” though the reason for this is not entirely clear.

The sell-off in the market “is somewhat reminiscent of the situation in late 2021—early 2022,” notes Finam strategist Yaroslav Kabakov: “It can be assumed that a number of market participants, having more information, began selling off the Russian market slightly earlier than the rest.”

The sell-off is sweeping across the board, leaving no rising stocks on the exchange. Gazprom shares fell another 3.47% on Wednesday, hitting their lowest level since 2008. Rosneft shares dropped 2.7%, reaching their lowest level since October 2022. Lukoil and Severstal shares fell by 3.7%, Norilsk Nickel by 4.3%, Magnit by 4.5%, and NLMK by 5%.

“Geopolitical risks have escalated again, and Russian officials are toughening their rhetoric toward Europe, primarily regarding the conflict in Ukraine,” notes Freedom Finance analyst Natalya Milchakova: The day before, Vladimir Putin stated that NATO countries are openly discussing preparations for war with Russia and increasing their military budgets, while Russian Foreign Minister Sergey Lavrov said that Russia no longer considers the U.S. an objective mediator in the Ukrainian settlement. “It seems that the stock market has come to the conclusion that it is impossible to resolve this conflict peacefully,” Milchakova concludes.

Added to the geopolitical tensions is the drop in oil prices, she notes: the price of a barrel of Brent crude fell to $73.22 on Wednesday, its lowest level since late February, having lost 33% over the past two months. Urals crude prices are hovering around $60 per barrel, although at the height of the Iranian crisis they soared to $100 and above.

Investors had been hoping for a deal between Vladimir Putin and Donald Trump, which promised Russia the lifting of sanctions and an end to hostilities. Now, most of them are at a loss, notes Andrei Khokhrin, CEO of Ivolga Capital.

Since the spring of 2024, when the Kremlin and Trump began negotiations and Russian officials were making plans for the return of Western companies, the Russian stock market has already fallen by nearly 40%, and its market capitalization relative to GDP is close to an all-time low over the past 26 years. “The longer and more severe the escalation, the lower we will see the Russian market go,” Kabakov warns.

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