Tensions between Russia and Ukraine continued to soar after Russia’s parliament appealed to Putin to formally recognize the Russian-backed separatist quasi-states Donetsk and Luhansk People’s Republics independence, in the Donbas region in Ukraine. Such a move Germany’s Scholz says would be a one-sided breach of Minsk format. This would torpedo the peace process and sent the MOEX Russia Index dumped as much as 14% with Rosneft (-18.3%), VTB (-17.3%) and Sberbank (-16.9%) hit. The Rouble shed over 2% on Monday.
The Rouble backed MOEX Russia Index crashed 14% to close at 3037 on Monday, the lowest level since November of 2020. The fall was the steepest daily loss since March of 2014, amid continued threats of war in Ukraine.
Update: President Putin signed a decree recognizing the independence of the separatist republics of Luhansk and Donetsk.
“I deem it necessary to make a decision that should have been made a long time ago — to immediately recognise the independence and sovereignty of the Donetsk People’s Republic and the Luhansk People’s Republic,” he said.
He used his speech to frame Ukraine as the aggressor. “Those who seized power and keep power in Kyiv, we demand they stop the hostilities immediately”. “Otherwise, all the responsibility for the possible continuation of the bloodbath will be on the conscience of the regime that is ruling in Kyiv.”
Mr Putin described eastern Ukraine as “historic Russian land” to which his country was “connected by blood”. In a long passage that resembled a discursive history lecture, he said Ukraine as a whole was a creation of the Soviet Union.
Sanction exposed stocks plummeted following reports of shelling and escalated military tension in the self-proclaimed Donetsk and Luhansk People’s Republics. President Putin had said he was considering requests by both regions to be recognized as independent states, strengthening the expectations that Moscow could openly deploy troops.
Meanwhile, the Kremlin said there were no concrete plans for a summit between US President Biden and Russian President Putin as had been the cause of a rally in stocks last night. French President Macron announced had both US and Russian presidents agreed in principle to meet to discuss the Ukrainian crisis.
Source: Reuters, TC, MOEX
From The TradersCommunity Global Research Desk