Russian Stocks Sink Most in 2 Years on Sanctions

• April 09 2018
• Ksenia Galouchko

Russian stocks tumbled the most in more than two years and the ruble headed for the steepest decline among emerging-market peers after new U.S. sanctions hit Kremlin-connected billionaires and tensions with the U.S. spiraled following the latest chemical atta…

Russian stocks tumbled the most in more than two years and the ruble headed for the steepest decline among emerging-market peers after new U.S. sanctions hit Kremlin-connected billionaires and tensions with the U.S. spiraled following the latest chemical attack in Syria.

The MOEX Russia Index slumped 3.8 percent on Monday, the steepest slide since January 2016. The ruble weakened 0.9 percent to 58.7025 against the dollar and ten-year local bonds fell, lifting the yield four basis points to 7.11 percent.

The currency plunged and stocks sank after the U.S. on Friday escalated penalties against Russia for meddling in the 2016 election by sanctioning dozens of Russian tycoons, companies and key allies of President Vladimir Putin. U.S. President Donald Trump warned of a “big price to pay” in response to reports of a chemical attack outside Syria’s capital, saying President Vladimir Putin and Iran “are responsible for backing Animal Assad.”

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“Longer-term, this pariah status inhibits Russia’s economic potential and the possibility of real integration in the global economy,” said Julian Rimmer, a London-based emerging-markets trader at Investec Bank Plc. in London.

President Donald Trump’s move on Friday adds to a succession of actions by the U.S. and its allies in recent weeks over the poisoning of an ex-spy in Britain. Russian markets have been under pressure because of the escalation of the standoff with the West.