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U.S. markets are experiencing a tilt towards Russia.

Stock market trajectory hinges on Russia-Ukraine negotiations progress. A bullish trend is anticipated, with the Micex Index poised for departure from the 'triangle'. The ruble's currency path remains steady.

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Stock market trends could be influenced by negotiations between Russia and Ukraine. A bullish trend...
Stock market trends could be influenced by negotiations between Russia and Ukraine. A bullish trend might emerge due to the upcoming developments. The Mosbirz index is showing signs of breaking free from its 'triangle' pattern. Meanwhile, the ruble maintains a steady state.

U.S. markets are experiencing a tilt towards Russia.

Moscow Exchange Index Swings in Response to Istanbul Talks

The Moscow Exchange Index kicked off the first full work week of May with a solid, 2% upward push. According to Dmitry Skryabin, portfolio manager at UК "Alfa-Capital," this spike was triggered by the announcement of the Istanbul meeting. But as it became clear that countries were sending negotiators instead of presidents, optimism started to wear thin.

This enthusiasm took a nose dive on Wednesday evening when Russia revealed its delegation list. The absence of "political heavyweights" left investors thinking the talks wouldn't lead to a speedy resolution. Many experts have been saying this for some time.

Trading volumes throughout the week remained low, approximately half the average daily level of recent months. This suggests the majority of market participants are holding back, waiting and seeing, while significant market movements are driven by speculators trying to cash in on news in a less liquid market.

Initial reports indicating no agreements were reached at the Istanbul meeting on May 16 caused the Moscow Exchange Index to plummet by more than 2%. However, this drop was quickly recovered within an hour. The rebound seems to indicate many speculators were closing out their short positions, which they had opened in anticipation of such an outcome. Additionally, Vladimir Medinsky, the head of the Russian delegation, expressed satisfaction with the meeting, keeping hopes alive for further discussions and possibly a peace treaty.

Alexander Shepelev, an expert at "BCS World of Investments," stated that the investor expectations for the Istanbul talks may have been too high, resulting in the Moscow Exchange Index dropping below 2800 points. However, the statements made after the meeting helped soften the situation somewhat, as the sides agreed to another meeting and to prepare their proposals for settlement by the next round of talks. The broader market was also boosted by the rise in heavyweight Sberbank shares and the return of oil prices to growth.

The short-term market dynamics will be entirely dependent on news sentiment. Next week, geopolitics will remain the main focus, with the market potentially reacting to updates following the Istanbul talks, and new signals from the Moscow-Washington line may emerge. Meanwhile, it is expected that on May 20, the European Commission will adopt another round of anti-Russian sanctions. And if there's no significant positivity, the week may see sideways dynamics for the MOEX Index, ranging between 2800-2900 points.*

Alexey Antonov, Head of Investment Consulting at Alor Broker, emphasized the significance of technical analysis in an interview: "Currently, the Russian stock market is filled with numerous small speculators who often rely on tech signals in their decisions. The daily chart of the MOEX Index shows a 'descending triangle' pattern, which usually results in a strong breakout. If resistance at 2900 points is breached, the move could be robust, potentially pushing the market above the 3000 point mark."

The most actively traded currency pair on the Russian market, yuan-ruble, ended the week relatively stable. The ruble strengthened until Wednesday, then reversed, closing the week nearly unchanged. This indicates no significant investment capital flow into defensive currency assets.

Stay tuned to our Telegram channel @expert_mag for the latest updates on the stock market, Moscow Exchange, and geopolitics.

Behind the Scenes

  • Influencing factors for the MOEX index include geopolitical developments, economic indicators like inflation and growth, interest rate alterations, and market-specific elements such as dividend announcements and commodity prices.
  • Geopolitical uncertainties, particularly the Istanbul talks and Moscow-Washington dynamics, can significantly impact market stability.
  • Analysts predict the MOEX index could fluctuate between 2,800-2,900 points in the short term. Some more optimistic forecasts suggest the index could reach 3,700 points by the end of the year if circumstances improve.
  • The start of the dividend season may support share values, especially if commodity prices like oil continue to climb.
  1. Despite the initial rise in the Moscow Exchange Index, investors' optimism dwindled due to the realization that high-ranking officials were not attending the Istanbul talks, leading to a decline in trading volumes as market participants adopted a wait-and-see approach.
  2. The short-term dynamics of the Russian stock market, as well as the Moscow Exchange Index, will continue to be heavily influenced by news sentiment, particularly updates from the Istanbul talks and new developments in the Moscow-Washington line, while geopolitics will remain a major focus in the coming week.

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