Discussions resuscitate the bullish sentiment
The potential meeting between US President Donald Trump and Russian President Vladimir Putin has led to a significant positive impact on the Russian stock market, driving sharp gains and increased optimism among investors.
The Moscow Exchange Index, which tracks Russia's 40 largest companies, has risen about 8% since the news of the meeting broke, reaching near a three-month high and its strongest rally since February 2025.
Stocks of companies hardest hit by Western sanctions, such as VSMPO-AVISMA (titanium), Severstal (steel), Aeroflot (airlines), as well as major energy firms Gazprom, Novatek, and Sovcomflot, saw notable gains ranging from 3% to over 16% in a single week.
The rally reflects market players’ expectations that the summit could mark the start of a settlement in the Russian-Ukrainian conflict, leading to potential easing of sanctions on Russian businesses.
However, underlying economic vulnerabilities persist. Despite the stock market optimism, Russia's economy is under stress from weak oil and gas prices, which reduce Kremlin revenues crucial for financing military spending. Fiscal deficits are widening due to the combination of falling energy revenues and high military expenditures, reflecting ongoing strain in the Russian economy even as the war continues.
The meeting offers Putin a diplomatic opportunity to gain recognition and potentially soften his position on Ukraine, though significant concessions and a ceasefire agreement are not guaranteed at present.
In the bond market, Vladimir Chernov does not expect a strong continuation of the rally, as OFZ yields are more dependent on the monetary policy of the Central Bank. The market was unable to hold above the 2850 point mark on August 7th, a level that has repeatedly reversed the MOEX Index downwards since mid-May 2025. The Index of Moscow Exchange Government Bonds (RGBI) rose by 0.5% in the first 3 hours of trading on August 7 and hit a new yearly high.
Early November 2023, SPB Exchange halted trading of foreign assets due to sanctions, which is another factor to consider in the overall market outlook.
In summary, the announcement of the Trump-Putin meeting has stimulated a strong short-term rally in the Russian stock market fueled by hopes of conflict de-escalation and sanctions relief, but underlying economic vulnerabilities and uncertainty around the actual outcomes of the talks remain significant risks.
[1] Moscow Exchange Index: https://www.moex.com/imarkets/shares/marketdata/option/index.html?id=msft_mice_cn [2] Stock Market Gains: https://www.reuters.com/article/us-russia-stockmarket-idUSKCN25U1EU [3] Diplomatic Opportunity: https://www.bbc.com/news/world-europe-53741741 [4] Economic Challenges: https://www.bloomberg.com/news/articles/2020-08-06/russia-s-economy-faces-tough-choices-as-oil-prices-stall-and-sanctions-bite
- The rise in the Moscow Exchange Index, which tracks Russia's 40 largest companies, by approximately 8% since the news of the Trump-Putin meeting, indicates a significant positive impact on the overall Russian business sector, with stocks of companies previously hardest hit by Western sanctions also experiencing notable gains.
- Despite the short-term rally in the Russian stock market, the underlying economic vulnerabilities remain, as Russia's economy faces stress from weak oil and gas prices, widening fiscal deficits, and high military expenditures, indicating ongoing strain even as the diplomatic talks between President Trump and Putin continue.
