Russia Sees $1 Billion Wiped off Stock Market After Trump's Putin Comments
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Russia's stock market took a sharp dive following President Donald Trump's jibe that Vladimir Putin was "crazy" and threatening new sanctions. Vasily Astrov, an expert on Russia's economy, told Newsweek Tuesday that Trump makes contradictory comments on Russia almost daily, which causes stock market volatility.
Trump issued the insult in a social media post—in which he also scolded Ukrainian President Volodymyr Zelensky—after Russia launched a massive aerial attack on Ukraine.
The Russian financial services outlet Finam said Monday, the Moscow Exchange (MOEX) was "gripped by negative sentiment" as it fell over 2 percent, which led to market capitalization falling by a reported 100 billion rubles ($1.1 billion).
Newsweek has contacted the Kremlin for comment.
A stock image of a screen showing benchmark ruble-denominated MOEX index numbers in Moscow on January 10, 2023.
A stock image of a screen showing benchmark ruble-denominated MOEX index numbers in Moscow on January 10, 2023.Why It Matters
Trump's rhetoric on the war in Ukraine started by Putin is continuously shifting, and his latest comments followed a warning that the U.S. leader would be stepping back from peace talks if there is no progress.
Kyiv, its allies and experts see U.S. sanctions on Russia, particularly on its fossil fuels, as key to pressuring Putin to the table and Trump's post threatening such measures will add to market jitters in the country's war economy.
What To Know
Trump took to Truth Social after Russia launched a massive attack on Ukraine over the weekend, with Moscow firing drones and missiles at 30 cities and villages and killing at least 12 people, including three children.
Trump's post on Sunday boasted of his good relationship with Putin but said that the Russian president "has gone absolutely CRAZY" and was "needlessly killing" soldiers and civilians.
Trump said that if Putin tries to take all of Ukraine "it will lead to the downfall of Russia," in the post which also took aim at Zelensky for "talking the way he does."
The Kremlin responded by saying that the outburst was down to "emotional overstrain."
Russia's stock market had fallen by 2.06 percent by 2.30 p.m. local time Monday, dropping to 2,711 points from its opening level of 2,735. By close of trading, it went down to 2,699, although by mid-morning Tuesday, there was a slight rise to 2,718.
Sovcomflot—Russia's largest shipping company—had the biggest drop of more than 5 percent, while shares in energy and metals giant En+ Group, state-run Gazprom and tech firm VK Group also fell.
Financial services outlet Finam said one of the main reasons for the drop was the geopolitical tensions following Trump's comments, which suggest that he is still considering tougher sanctions against Russia.
The outlet also said the economic situation in Russia is "alarming" and that the reporting season for the first quarter has shown that even stable businesses are going through difficult times, affected by western sanctions, and the tight monetary policy of Russia's Central Bank, whose key interest rate is at 21 percent.
Adding to pressure are reports that the EU is preparing to disconnect another 20 Russian banks from the SWIFT international payments system.
Astrov, senior economist at The Vienna Institute for International Economic Studies, said that the slump in the stock market is "definitely the result of Trump's comments" rather than the prospect of EU action.
What People Are Saying
U.S. President Donald Trump on Truth Social: "I've always had a very good relationship with Vladimir Putin of Russia, but something has happened to him. He has gone absolutely CRAZY!"
Vasily Astrov of the Vienna Institute for International Economic Studies said of the stock market slump: "This is definitely the result of Trump's comments, not EU sanctions…EU sanctions…had already been priced in—whereas Trump's statements on Russia contradict each other almost on a daily basis and result in Russia's stock market volatility."
Financial services outlet Finam: "The Russian stock market is gripped by negative sentiment."
What Happens Next
The war Putin started is tied to Russia's currency and stock markets which took a hit in April following the collapse of scheduled ceasefire negotiations over the war in Ukraine. There is anticipation over whether Trump's warning will lead to sanctions that might add to further turbulence in Russia's economy.
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