[Christian Harris]

The MOEX Russia index has experienced a remarkable surge, reaching 3,273.49 points on February 14, 2025, its highest level since May 2024.

This upward trajectory aligns with the broader positive momentum observed across Russian assets, fuelled by growing optimism that the protracted conflict between Russia and Ukraine may be nearing its conclusion.

The catalyst for this market rally appears to be a recent diplomatic breakthrough initiated by US President Donald Trump.

In a significant development, Trump engaged in direct communication with Russian President Vladimir Putin, signalling the United States’ willingness to mediate ceasefire negotiations between Russia and Ukraine.

This unexpected intervention has sparked hope for a peaceful resolution to the long-standing conflict.

Adding to the positive sentiment, there are indications that Washington may be considering a more conciliatory approach towards Russia.

The softer rhetoric from US authorities, including potential concessions, has bolstered expectations that sanctions against Russia could be lifted.

Such a move would pave the way for the reintegration of Russian capital markets into the global financial system, potentially leading to increased exports and triggering a substantial influx of foreign investment into the Moscow Exchange.

The impact of these developments is evident across various sectors of the Russian market.

Energy giant Gazprom has seen its stock price skyrocket by over 70% since hitting record lows in November 2024.

Other major players in the Russian economy, including Sberbank, Rosneft, and Lukoil, have also experienced significant gains, with their shares trading at or near six-month highs.

Specific stock performances on February 14, 2025, underscore the market’s bullish sentiment:

• Gazprom: 171.50 rubles, up 3.11%
• Lukoil: 7,692.50 rubles, gaining 2.10%
• Rosneft: 577.45 rubles, increasing by 0.72%
• Sberbank: 316.00 rubles, rising 1.90%

On the monetary policy front, the Bank of Russia has maintained its key interest rate at 21%, a level that reflects the ongoing economic challenges faced by the country.

However, the central bank has hinted at the possibility of a rate hike in the coming month, suggesting a cautious approach to managing inflationary pressures while supporting the economy’s recovery.

As the Russian stock market continues to rally, investors and analysts alike are closely monitoring diplomatic developments and potential policy shifts that could further impact market dynamics.

Source: Trading Economics

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