Moscow market plunges to record lows after Kremlin's message to Washington

Yesterday, on October 8, the Russian stock market experienced its steepest one-day drop in three years after a senior diplomat said that progress toward reaching a potential peace agreement to end the war in Ukraine had largely stalled.

The Moscow Exchange Index (MOEX), which tracks the shares of the 40 largest public companies in the country, fell by 4.05% to 2,563.3 points, the lowest level since December 2024 and the sharpest one-day drop since September 2022.

Stock movements:

• Gazprom shares fell by 4.1%

• Sberbank — by 4.9%

• VTB — by 4.7%

• Rosneft — by 2.5%

Shares of Severstal and Aeroflot fell by almost 5%, while shares of Rostelecom, Inter RAO, and the Magnitogorsk Iron and Steel Works lost more than 5%. Mechel shares suffered the biggest decline — 6.7%.

"Geopolitical tension continues to put pressure on investors," said Yaroslav Kabakov, strategy director at Finam.

What triggered the collapse

The sell-off accelerated after Deputy Foreign Minister Sergei Ryabkov said that the "strong momentum in favor of reaching agreements" that followed the meeting between Russian dictator Vladimir Putin and US President Donald Trump in Alaska had "been exhausted."

Ryabkov added that the “structure” of Moscow’s relations with Washington is "collapsing," and the Kremlin sees "any movement" from the US toward restoring ties.

A day earlier, Putin told senior military officials that their goal remains unchanged: "tensure the unconditional achievement of all goals of the special military operation."

"After a period of inflated expectations and rising stock market prices, a wave of pessimism has washed over investors," analysts at PSB Bank said.

It is worth noting that the MOEX index has been falling for five consecutive weeks.

In addition, the World Bank recently downgraded its forecast for the Russian economy, projecting growth of:

• 0.9% in 2025,

• 0.8% in 2026,

• 1% in 2027.

The state of Russia’s economy

It should be noted that Russian society is increasingly exhausted by the protracted war against Ukraine.

Against this backdrop, the Kremlin is trying to maintain control by launching a new wave of propaganda.

At the same time, it was reported that in 2026, Russia will spend twice as much on television propaganda as originally planned. The money will go to entertainment channels and Kremlin-controlled broadcasters.

Meanwhile, President of Ukraine Volodymyr Zelenskyy also stated that Russia has economic problems, but Moscow continues to finance the war through energy exports.